Actually my main problem with Android is that it uses Dalvik as its VM and not actual Java.
Yes, that does make it slower. But it also has advantages over Apple's use of native code. The differences are going to become unnoticeable as Android gets a JIT and as hardware gets faster.
Our phones are of similar age. His phone is more responsive.
All true, but not a practically relevant difference. In one or two generations, hardware is going to be so fast that this is going to be unnoticeable.
His virtual keyboard works better than mine.
It's faster, but whether it's more usable is debatable. And for Android, you can get third party keyboards, while with iPhone, you're stuck with Apple's fast-but-substandard virtual keyboard.
His selection of apps dwarf mine,
Yes, but many of the iPhone apps are poor clones of each other. And there are entire categories of apps missing from the iPhone store because Apple doesn't approve them.
and one more cool thing about iTunes is that all of the apps he can buy are listed in US dollars,
Yeah, but there are also lots of uncool things about iTunes, like the fact that some things, you simply can't do on the phone without plugging it into iTunes, and then there are the endless "Backing up" messages.
iPhone is like the original Mac: Jobs cut a lot of corners and messed up the architecture, but made it look pretty nonetheless. This time, however, we have a real, technically superior alternative.