I'm doing something similar for a company. I get a percentage of the sales.

You just have to make sure that it's a stable, well directed company and then you'll reap the benefits otherwise you can put a lot of time and won't get much in return.

One of the major reasons that I'm doing this also is that if the company does well, I could be let's say in Brazil where I could be living off the royalties (dollar goes a long way), not spending the money here where everything is very expensive compared to over there and can still develop and support the app thru the internet. (only applies to single guys unless you have an open relationship ;-)). I'm sure some programmers here are currently doing this or have thought about it.

About what percentage, you'll have to do your numbers. Try to figure out how much time you'll put into the project, what type of sales they're expected to make and what is the least amount of money you'll be willing to make off the project. If you think it will at least satisfy the least amount of money you are willing to make then you can start negotiating with your client. But it it a risk.