Exactly, the very first iPhone didn't even have installable third party apps. 'Why didn't they sue webaps' ignores the fact that it was tried right from the word go and in a fight with native apps that was skewed in web apps favour, they still lost massively.
Chrome OS is of course an attempt to build an OS entirely on HTML and Javascript, but you don't see it on phones because the memory, CPU and power requirements are too high. Eventually these problems will likely be solved, FirefoxOS was another attempt, but if we can't even do it right now there's no way it was a viable option back in 2005.