Yes they do, but how much depends on your rating and amount of competition. A few months ago I killed a $1.99 app that hadn't been updated in over a year, yet 3-4 people were still buying it a day. I just felt bad charging for something I had no plans to go back to, and that had become a lot less useful after changes Apple made in iOS4.

Clearly you're not going to live on $5 a day, but I think a good strategy is to build a decent number of smaller "library" apps while working to fry bigger fish.