The major issue for the industry here is not that free-to-play games are crowding out the "higher quality" titles. Those same games have a strong foothold on other platforms as well.

The actual problem is a failure to deliver combined with a failure to market. We've not seen many successful high-quality mobile titles because developers are failing to position their offerings correctly.

Mobile is a high-risk purchasing environment (despite costs being low, it's a perception thing) suffering from classic information asymmetry. You have no way of meaningfully getting to grips with what you're about to buy, and there are no refunds. It's unsurprising then that most purchases are low cost and driven by recommendations or wisdom-of-crowds popularity contests like the app store charts.

What developers (and the app stores) desperately need are better ways to resolve the lack of information that buyers have, to better communicate real (rather than faked) quality, and to assure players that their limited time and money will be well spent on this game they've never heard of rather than the bird game that everyone's talking about.