Android wouldn't be necessary, but that would bring an open App development ecosystem with it, which would be great.
It'll certainly be interesting to see what android can bring.
If that can happen once, it can happen again. And SMS price structure is bloated. Things are ripe for a change.
In the case of cell phones, the benefits are large and obvious. In the case of mp3 players I can't think of any.
Is the iPhone, or other smartphone for that matter broken enough to cause pain to users?
I don't know, you could be right, but I don't see the problem that gets solved by Android right now for the average user.
That's the same with the iPhone. Believe it or not, a lot of people hate AT&T. Or they have family on Verizon, and get free minutes when talking to them, so they sign up with Verizon. Or Sprint or T-mobile or whoever else. Or they get 15% off from work.
No matter how great the iPhone is, being tethered to AT&T means that >2/3 of customers won't even consider it. What this means is that Android, by being on whichever carriers want it, immediately appeals to at least 2x the number of customers. It could be significantly less good than the iPhone, and it will still sell more.
Then there's the form factors. It might be hard to believe, but most people just want to talk on their phone. Android can be on a cheap-ass clamshell. People with cheap-ass clamshells might still want to check the weather, play simple games, etc, so there will still be a market for apps there.
A lot of people use their mobile for business. They care about call quality, battery life, and a keypad, all things the iPhone sucks at. Those people will, on whichever carrier their company has a deal with, have Android phones available to them that fit that needs. (No idea if any will make inroads on Blackberry though.)
The iPhone has Apple/AT&T's marketing budget. Android has Google, a bunch of OEMs, and a bunch of carriers.
All of those are inherent benefits of openness.