I was in the exact same situation a few years ago: I was developing a game full time (I was coding and paying for contractors) on which a friend had given me good ideas, and input, but he wasn't producing much after that.

I was really afraid about breaking our friendship, but our "fuzzy" working relation was also endangering the game. 

I talked with him about it and told him it that a partnership was not really working, and that it would work better if I could pay him as a contractor for the work he already did.

He told me there was no problem, that he obviously didn't have that much time to contribute, and would be happy with me offering him dinner occasionnaly.

I am still working on the game, and still occasionaly ask him for input, and we are still very good friends. Maybe I was lucky, but I think being open in this kind of discussion really helps.