Monetization in android is a major problem, regardless of the category. Selling an app is a non starter... Angry birds themselves knew that, which is why they went for ads. The only exception is cut the rope, but they had lots of money to spend on advertising.
Ads are also a problem, since it is very hard to get the number of downloads where it makes sense. You can expect to make around 0.4 cents (not dollars) per download, which means that you can have a successful app that makes around $4 a month.
In app purchases work great if you have a game that supports these mechanics, and get critical mass (think zynga games). The game Pah!, which had 202,000 downloads made $200 by making player pay the $0.99 for the game (the different payment platforms they tried just didn't work, and most of the world doesn't use Google checkout).
You can try StartApp which at least promise 5 cents for US downloads (1 cent non US), but that means bundling with their search app (it downloads at the same time, and has a different icon for running it). If that bothers you or your users, then its no good.
The iPhone does have a better market, since you cannot do anything (other then make phone calls) with that device without adding your credit card (they have over 225M cards in their system) so buying is easier. You still need to worry about piracy - Pah! has 600K downloads, sells for $0.99 and they made only $60K (they are still a success).
Its very hard to make money in this business, as most business models don't work. In fact, I am working on a different business model myself, but I won't go into that, since its still in private beta, and this community doesn't appreciate it when people promote their own businesses.
