It costs the bitcoin network something like 0.001 US cents to process a typical transaction, so transactions less than about a cent don't make sense.
RE: using market forces for transaction fees: I agree 100%. But that code has to be written and thoroughly tested. The hard part is figuring out how miners communicate their "fee schedules" to clients (you can't just ask miners "what's your fee schedule" because they have an incentive to lie to try to get higher fees...).
So in the very short term fees are being dropped from 0.01 BTC per kilobyte to 0.0005 BTC per kilobyte.
I'll say it again: expect more growing pains like this. There will be more of them.