Ever since "losing" to Microsoft on the desktop, Apple have slowly perfected their strategy for being the smaller alternative. They find the most lucrative niche and design to the point where they can own that piece of the market. Built into Apple products is a sense of superiority, the feeling that the rest of the world is jealous and frustrated. It's in their ads, and its in their users. This has shown its effectiveness in the computer market, and it will probably make them a ton of money on the mobile scene as well.
But Apple didn't have to do this in the mobile world. The iPhone was the default smartphone. I was once talking with a rather avid iPhone user who he asked me "what's the market for Android?" I fina;ly convinced him that it could be everyone when I replied, "what's the market for Windows?"
The iPhone is a product. It has a target niche, a company behind it, a list of features, and everything else one expects. Android is not - it's a platform. The Droid is a product. The Nexus one is a different product. Like Windows, Android twists and bends to the offerings of each vendor. Android has the more scalable long tail strategy - instead of trying to please your customers directly, let the market mold your product into as many forms as it will pay for.
I don't think that Apple have necessarily screwed up. They may have given up the big fish, and they may have had a reason. For one, Apple are doing what they're best at. They also may have a strategy that integrates with the Mac. They may also be right. Maybe the mobile phone isn't the next computer. Maybe it's like the iPod, best at doing one thing very well.
I think Apple is making a mistake in breaking developer trust. As long as they keep market dominance, people will keep coming back to them, but as the numbers show, Android is poised to surpass. When there are many more Androids out there than iPhones, iPhone dev is gonna be a tough sell.