I think the closedness of the iPhone is actually beneficial (to that particular phone). Skipping past the "average consumer doesn't care about the iPhone being a closed platform" and the "closed platform doesn't let developers innovate as quick" arguments, the iPhone excells at what it does and now -relies- on its closedness to maintain its market position.
The main point of the iPhone was integration with apples line of products, thus the iPhone is just another addition to the apple product line. The system behind that is there to make that product what it is and nothing more. Because, you are dealing with the mobile space with the iPhone, the best way to control how much innovation is taking place on your device is to keep it closed. After all, can't have apps that introduce new functionality that could potentially be folded into future devices, that could hurt the iPhone revenue stream.