No, there will be no need to purchase a license again. In the case you described you'd purchase $199 upgrade package and got access to support and all upgrades (v2.0 included) for a year.

No. "For life" is a really long time, plus development costs both time and money. Upgrades are important revenue stream for majority of software businesses. That is something that keeps them around and motivated to continue improving their products.

I've just recently heard a story from Mac indie development shop that offered free for life upgrades when they started. Eventually they learned a hard lesson that you cannot base your business solely on new customers. At the end they were forced to offer customer two options - to go out of business or to introduce "pay for upgrades" model. Most of customers voted to have them around :) And they are still in business, producing some nice Mac apps.