Most of these things are blown out of proportion but its true, when youre as open as google, that people are going to take advantage of it. so for me i just read the permissions, if i think an app doesnt need a permission it asks for i dont download it.
the apple store has had apps that have been removed because it was thought that information was sent from the users phone. the thing with apple is you have to have a mac to write their programs i believe, and i know you have to pay a pretty large sum of money to even put your app in their store, and i believe they even take some of the money from each app downloaded. google sends all the money to the devs and there are no huge sums of money they have to pay to get their apps out there.
but i would still much rather buy and install free apps from the android market than have 1 penny go to the communists over at apple