iPhone is for most end users and Android is for geeks.
Apple understands end users more whereas Google understands geeks more. I still remember the moment when my iPod touch wowed my mother-in-law when she learned to browse photos.
In the Android world, definitely there will be lots more innovations than the iPhone world. Android's openness is completely opposite to iPhone's control-freak model. No doubt openness encourage innovations, a lot more innovations. But openness creates chaos too. I won't be surprised that there will be very innovative and useful applications in the Android world that make iPhone users sweat. But the problem is there are too many choices, which will create headache for most of the users (of course this might not be problems at all for geeks like me :)). Most of people have other more important things in their lives than playing with their favorite gadgets. They just want get the job done, as fast as possible.
iPhone would become Windows in the mobile world, whereas Android will become more of a Linux. Competition will exist forever, but most of the people would choose iPhone because its so intuitive to use. Of course developers and more technical savvy users would hate it, because there are too many limitations. Developers like to play God to create things without limitation.
The iPhone's world is more like the God's world. The God (Apple) decides what should exist and what should not.
Android is more like the real world ruled by Darwin's evolution theory. Species that adapt well in the environment thrive whereas those species that don't vanish.
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