(App Store - iPhone) != App Store
Is it the humongous supply of apps? Androlib [1] suggests that the Android Market is approaching 30K apps. Many of them may be crap, but then again, I think many of the iPhone ones are too.
Is it the exclusive iPhone only apps? Yes, there are a lot of them (considering app store sizes alone), but I'm guessing most "popular" apps exist in both stores. Anecdotal evidence: When my dad got a Droid, he asked me about all the apps I used on my iPhone. Most of them were on the Android store too. In the few cases where the apps didn't exist, there was usually a comparable replacement app from some other app maker. Now that doesn't necessarily translate to games, but I don't really play many games on my iPhone (and can't comment on the store differences there).
Now, the Apple App store has been a huge success. If I was a mobile app developer, I wouldn't hesitate to develop for the iPhone (even being aware of the sometimes unpredictable approval process). I also don't like the idea of a network owned app store and the complications and restrictions it will probably bring, but we'll see what their announcement entails. I just don't think that Apple's app store is the only viable one, and certainly isn't the best fit for all people (nothing ever is).
The idea that we need a single supplier of something or a single marketplace from which to purchase things is laughable -- to me, at least. To carry this analogy outside of the 'phone app' space, should we just give up on all generic retail space so that consumers just go to Wal-mart for everything but furniture (Ikea for furniture). Then consumers won't be so confused about where they should go to buy their furniture or groceries.