"Pay what you want" isn't a terrible idea. It just shouldn't be used as a primary source of revenue. I've participated in many of the Humble Bundles and always pay over the average to get the highest bundle. Many of these games I've never heard of and would have never gotten a chance to play if the Humble Bundle hadn't been around. The devs get less money per sale then they would through the App Store or Google Play but they're also getting a lot of sales that they never would have had otherwise.
Ya, I think the 'Pay What You Want' scheme works. Valve actually did a study on this stuff, about what prices people buy stuff at and how much profit you see at each point of sale.
You put it out for full price, and those rabid fans or people who really want the game will buy it. The rest will not buy it until it goes on sale, some think they will never buy it. A few months later it is 50% and a bunch more people buy it. A few more months after that and it's 75% off and a bunch more people buy it, and people who never even looked at the game take a second look and decide to buy it.
I never would have bough this particular game had it not been on the Humble Bundle. I think I paid like ~$7 for the Humble bundle, but then "re-bought" the game through the other Android bundles anyway, so total spent was probably around $14, split among the developers of all those bundles. However, I never would have bought those games anyway, so they got some of my money which is better then none for having it at full price.
What has also been shown is that people on iOS are much more likely to buy stuff at full price. What that says about people who own Apple products is up to your discretion.