I think that it's a balance, right?
If you provide a robust PvP arena, people get motivated to keep up in that arena.
For me personally, I'd rather pay 5-10 dollars and just unlock a bunch of stuff.
I'll never pay for a stamina boost or a "one more try" boost.
I'd rather win with strategy.
Basically, you give people the option to spend a lot of money if they're really competitive. If they're not, you nudge them with challenge, or with vanity/cool stuff.
Edit: Oh and the fact that Mistwalker is a small company works in their advantage here, because they don't have huge overhead costs. They need a lot of downloads because statistically they'll get more money that way. The fact that the payment hooks are not so insidious is good for the consumer, but hopefully they can convert enough people.