Since then, Android has certainly grown into an viable competitor to the iPhone, though it's still far behind in many ways, particularly developer adoption and the high end of the market (which is by far more profitable).
Apple has also gotten a bit better and faster in app approval from what my friends say. Still, the iPhone is a lot less hackable than especially the nexus phones. It's still bewilderingly hard to test an app with real people (I'm writing my first iOS app right now and so wish I could just email an apk to even 5 friends). I know many get around this surreptitiously using the "enterprise" program (my hunch is Apple knows but quietly lets it slide knowing that a lot of the best developers do this).
Compared with rooting an android, jail breaking an iPhone seems more risky and less effective. And Apple seems to have succumbed to carriers wrt banning tethering apps not only from the app store, but also in code (from what I hear, haven't had the chance to see if it's possible yet).
However, there are a lot of reasons startups still start with iOS and leave android as a second thought:
1. iOS users actually buy apps, use them, and spend money in them which is extremely rare amongst android users
2. A lot more iOS users have the latest OS and enough also the latest hardware, which means you can do the coolest stuff the platform allows and (at least initially) not have to worry about deprecating well for legacy devices/OS.
3. the devices themselves are (as pg wrote) just too much better designed compared to to even the best android phones. I have a nexus 5 and iPhone 5s and slowly over time I pretty much only use the iPhone except when developing for android. It's little things that cause this behavior, like being able to plug in the iPhone's power cord in the dark (since it's symmetric).
It's still too early to decide whether Apple's tight control is purely a good or bad thing. You could make a decent case either way.