This is a complete fallacy and ignores everything inside.
The iPhone wasn't just the hardware—though it was very good for what it did, with e.g. Android taking 3 years to match the multi-touch or accelerometer sensor quality even on their flagship phones.
What made the iPhone shine was the software, where they took the mature base and frameworks of OS X and used them to power a phone. While competing smartphones were still running on underpowered embedded kernels, iOS was supremely modern, fully threaded, with full separation between CPU and GPU, needed for that butter smooth response. And on top of that were frameworks for image/media processing, vector/PDF rendering, a mobile GPU-accelerated version of WebKit, etc. All the stuff that powers QuickTime, iTunes, iLife, was all there, and in non-neutered, slightly modernized form.
Thanks to this, Apple could nail both the feature set and performance of their built-in apps, and it opened the door for the app store to explode with innovation. The difference between a good UI and a bad one isn't a skin, it's how responsive everything is and how easy it is to do sophisticated things. It's a camera app that starts up instantly, a photo gallery that can generate and load thumbnails without lag or hitches, a built-in search engine that is fast and language-aware, ...