Here's why I agree with Mike's position that mass d20 PDF sales hurt innovation:
Say you had an idea for some way to improve or add to a game (new mechanics, spells, monsters, etc.) that you felt was interesting enough to be worth sharing with other gamers. Before this phenomenon appeared, you basically had two possible avenues for getting your content out to the public - either you submitted it to a major publisher in the hopes it would be included in a future print product (hopefully providing you with some token compensation), or you just posted it in online forums or on your own web site (for free).
Now you have a third option - publish it yourself, and sell it for a small fee. While in the past this option was prohibitively difficult and costly, the arrival of the PDF format, cheap & powerful editing software, and easy-to-use online stores have made it far more straightforward. In fact, it has arguably become the most attractive option for many aspiring designers... they can do something they enjoy while maintaining their independence and earning a little extra cash.
The problem is that, in order for this new option to work, it requires these designers to be somewhat protective of their content. Because if it became available for free, then this option would lose its advantage over the other two. So, despite often labelling the content they create as OGC, these designers are compelled to restrict it from being seen or used by anyone who doesn't pay. So many of the interesting ideas that may have once been circulated in public forums, and potentially debated, evaluated, and improved in the process, are instead made available only to those small few who are willing to keep paying and sort through the vast sea of available material in the online stores.
Of course, it could be argued that without the financial incentive, no one would have bothered to generate much of this content in the first place. But it could equally be argued that much of the content that would otherwise have been made freely available is instead restricted to a much more limited audience.
The PDF model also has other issues. In order to create products for which a reasonable fee could be charged, it's common to lump a variety of different ideas with some related theme into one package. So even if only one or two of the ideas interest you, you have to pay for the whole thing. Also, you can't really know how useful a product will be until you buy it and read it. Reviews help, but they're subjective, and the sheer quantity of products available makes it difficult if not impossible to generate reviews of consistent quality for all of them.
I think the response to recent proposals for d20 OGC wikis serve to highlight these problems. Instead of getting an organized and searchable index filled with diverse ideas to improve peoples games and stimulate further development, we get resistance from a new breed of semi-profressional designers attempting to jealously guard their money-generating content. I'm heartened to see there's at least one designer who sees this as a negative thing.