Unfortunately, Joe is correct that "Web technology is still relatively weak, and improving slowly." On the iPhone (and, to a lesser extent, on the desktop) there is no comparison between the quality of native apps and the quality of web apps. Native apps still afford much more to the developer. Yet the web stack has proven to be very developer and user friendly. Unfortunately, it is crippled by the browsers (especially one browser in particular...).
Somehow we need to accelerate the empowerment of the web stack. One way to do this is to diminish the power of various "native" stacks. Ironically, Apple is one of the companies leading the way in this regard. The latest version of iTunes is almost entirely WebKit based. Mobile Safari on the iPhone can use all those amazing CSS capabilities that other browsers can't yet, even on the desktop.
In the end, I have to agree with Google's strategy: bet big on HTML5. Eventually, all apps will be web apps (though hopefully they won't require a native app -- the browser -- to run). I just don't know what to do in the interim while the web stack is still crippled by the browsers.