Putting the pros and cons of the free hardware aside, I'm not sure getting rid of it would solve the demand problems. Apple charges $700 more for WWDC tickets, give away no hardware, and it still sells out in under two hours.
I consistently hear the key reason to go to WWDC, is that a good portion of the Apple Engineers take the week off, and go there to answer, one-on-one, questions that external developers have regarding APIs and use cases. Quite often, the person answering the question, is the Apple Engineer who wrote that API in the first place.
Personally, I don't own an Android device, but I'd probably sign up if I lived in the area. It would be fun and I'd probably break even so why not?