Of course you can give away whatever is in your possession. Your friend can keep the apps as long as he clicks carefully and doesn't allow iTunes to delete them.
I am not a lawyer, but I don't think you own the software - just a license to use it. If you look at the current store terms, it asks us not to transfer a license among other restrictions.
You may not rent, lease, lend, sell, transfer redistribute, or
sublicense the Licensed Application and, if you sell your Mac Computer
or iOS Device to a third party, you must remove the Licensed
Application from the Mac Computer or iOS Device before doing so.
To complicate things, there may be local laws that prevent this sort of language or restriction, or other problems with an "agreement" where one party might not be able to change or negotiate any of the terms. Get legal advice if you are worried about this end of things.
Technically, the apps will run until the phone needs to be restored or the user removes one or all of the apps. The next software update will have that person either losing the apps, needing your password to download them again, or needing use of a computer that is authorized to transfer your apps to that device.
If you give them the password to your account, they could be nice and only access the apps or run up charges against your name or account (or even change your password).
The best technical workaround if you want more than one account's apps on one device is to let him sync his apps from his computer and you place your credentials on that device and download whatever purchases of yours that you want on that device. Every time the device syncs - the apps from the computer should update and it will offer to transfer your purchases - but the warning that the other password is needed to transfer will pop up each time a sync happens. Your apps won't update or delete during a sync. You could log in to update them. In practice - it's a nice way to try some things, but your friend will likely tire of the warnings and delete the apps and buy the ones he wishes to keep so his syncs are fast and warning free.
In the old days when it was just music and less powerful iPods, I seem to remember 5 being the big number to remember. 5 accounts worth of protected music could run on any one iPod. Your account would work on 5 computers and there was no restriction how many iPods connected to a mac so the whole neighborhood could have connected and gotten music from your one computer.
Now it's a little harder to remember - 5 computers get purchases, up to 10 can auto download purchases and no word on how many can manually load or how many accounts are "allowed" technically on one device. The hassle factor keeps me from getting any more than two or three accounts purchases on any one device at the same time.
I hope I didn't go on too long here - there's always that edit button :-)