Don't you mean the Storm? The Bold was pretty solid, and the original didn't have a touch screen. It was the storm that had a crappy touchscreen that physically moved to touch, and it sucked.
Fun trivia- Most of the BB employees in my department switched from Storm to Bold when the Bold was released. As a result I had a pile of Storm in my drawer as my test devices.
As I recall, the development cycle for Storm wasn't two years - it was less than a year. At that point it was the fastest cycle that RIM had ever had for a device, and it was done at the request of Verizon. Back then the iPhone was still an AT&T exclusive in the US market and Verizon demanded something from RIM so that they could compete with it.
I'll echo the fact that nobody I knew internally seemed interested in using Storm as a primary device. I think everyone knew it was junk. But Storm 2 went a long way towards a device that I would actually be interested in using.
As you said, the Storm was developed in a year so some corners (especially the OS side) were cut. The Onyx was 'properly' engineered so (internally) everything was better and easier to deal with.