While the fragmentation such as it is really sucks for developers, I do see an upside.

It's a grand experiment with many competing designs, all striving to become the best and biggest (sounds like Osmos ;).

iPhone iterates down a closeted path. Innovation for iphone depends solely on the creativity at Apple. And while that is nothing to sneeze at, if some really left-field neato must-have innovative feature occurs, I think it's going to be found on Android first.