Disney has recently announced that it saw a 40 percent increase in iOS app downloads this holiday period, as compared with the same period last year.

The company’s popular Where’s My Water? application saw over six million downloads during the holiday week, across both iOS and Android mobile devices. Indeed, the $0.99 app has proved to be a huge success.

However, according to┬áBart Decrem (Disney Mobile GM), this year, it’s all about the “freemium” model. As reported by TUAW:

He says that “freemium” is the current word in mobile gaming: “2012 will see freemium models around many types of gameplay — as is already being shown by the success of Temple Run.”

For those of you who aren’t familiar with the term, “freemium” applications are usually free, but feature upgrades which enhance gameplay that can be purchased in-app.

Already, we saw evidence of this at the end of 2011, when Gameloft’s Dungeon Hunter 3 moved away from a fixed-price app and instead adopted the freemium model.

Do you prefer freemium applications, or would you rather spend some cash on a game that doesn’t feature in-app purchases?

Let us know in the comments.