This was a great incentive for developers of existing applications to keep updating their applications and getting it easily noticed by users.
It was also a great incentive for developers to game the system and swamp the reviewers by submitting trivial updates every week to keep their apps at the top of the list. Tragedy of the commons.
Actually, I think it's a positive thing to the user, since it encourages incremental development. Anything that incentivizes "release fast and iterate often" incentivizes good development.
On the other hand, it did tend to swamp the review process.
The lesser evil would have been to allow everyone an update at least once a month.
The current app store policies encourage developers to iterate apps i.e develop a bunch of apps in a month or two and hope one or two of them shoot to the top.
Developing compelling desktop level full featured apps over the long run are discouraged.
It was also a great incentive for developers to game the system and swamp the reviewers by submitting trivial updates every week to keep their apps at the top of the list. Tragedy of the commons.