Turns out, I've been giving you bad advice. Or at least outdated advice. In iOS 6 did away with this functionality. Perhaps iOS 7 will bring back the ability to cull your purchased list from your phone, but for now, it requires a trip to iTunes. *sad trombone*(in the heady days of iOS 5), I showed you how you could simply swipe on an app on your purchased list right on your iPhone to hide it. For no good reason at all (at least any that I can see),
Open up iTunes and click on the iTunes Store button. Next, click on the home button if the Store didn't open to this view. In the right column, under the Quick Links header, click on the Purchased link. Click on Apps from the top of this view, and you'll see a grid of your purchased app. Hover over an icon and a small X button appears in the upper-left corner. Click the X to hide the app. The app will be hidden from the purchased list on your phone the next time you take a look at your purchased list; no sync is necessary.
To reverse course and unhide an app, click on the button with your username in iTunes and select Account. Next, in the iTunes in the Cloud section, click the Manage button that sits to the right of the Hidden Purchases. Select Apps and you'll a grid of icons for all of your hidden apps, each with an Unhide button. Click the button and the app is returned to your purchased list.
(Via Here's the Thing)