The problem is that he only sees a single market, and that's the high-end market that competes with Apple.
Competing with Apple sounds good, but it's hard. The Pre when announced had a huge advantage over the iPhone which has largely faded away in a matter of months. Apple have the development team, the advertising money, the branding, the fashion, the R&D department, and the connections with suppliers to get hardware features before a small-player can. You're doomed to be forever playing catch-up.
What's eventually going to happen is that most people will want a product that's almost as good for a lower price, on a different network, or want something in particular that's different to what Apple are offering. In the long-run, that's Android's differentiator, as Apple aren't going to want to cut features in order to compete on price, or offer a variety of specialist features such as a physical keyboard.
Finally, I hardly think telling people to wait for the 2nd generation means that people will be "waiting forever". So far, only a single manufacturer, HTC, have released Android handsets, and both the G1 (HTC Dream) and G2 (HTC Magic) were undoubtedly rush-released and flawed. The trickle of much superior second generation handsets has already begun - the HTC Hero was released last week, and the Samsung Galaxy i7500 is supposedly out next week in the UK.