Third party apps on the iPhone were originally supposed to just be web apps run in Safari. iTunes was just for the loading of music (and I think video?) and basic activation and such. The iPhone was announced in January 2007, and released in June 2007. The SDK was announced in October 2007, released in early 2008. You had to wait until users upgraded to iOS 2.0 (released summer 2008) to actually run those apps.
No you're right... Still, I find it hard to believe that they built the entire iPhone SDK and App Store in less then a year. I'm going to guess it was part of the original idea, just delayed for some reasons.
Anyways ignoring that, the "App Store" was built alongside iPhone and released at the same time. So I'm not sure where you're getting yo facts from.
But Netflix has done a much better job on video. And I agree that iTunes is a little weak.