Secondly, the Android Market will likely leave the iPhone App Store in its dust due to the availability of free and open source apps, as well as paid apps.
...because the iPhone App Store doesn't have free apps? Heck, like they can't be open source? Perhaps you don't get get that feeling from the proprietary distribution network, but what's stopping anyone from openly hosting the source code themselves and allowing anyone to modify it for their own free apps?
I tend to see Android lagging behind primarily because "open source" is not a salve that makes everything all better. The iPhone/Touch has an untouchable advantage in that you can quite easily target just ONE spec, whereas the more widely adopted Android is, the harder it becomes to program for all the devices. (Does Android even have a "minimum spec" target that is required, so at the very least there's a dependable lowest common denominator?) Plus, Apple has a wider brand image and platform strength that brings people there for a variety of different reasons, while Android--for the time being--is sought out primarily by people looking for THAT smartphone.
Where I see Android being able to pick up ground depends quite a lot on the software and services Google itself wraps around Android, because their software tends to be quite exceptional, and they are commonly expanding services that no one thinks they want... until they discover them and WANT them. If they offer software that overshadows what the iPhone comes with out of the box, and quality services for free that Apple is trying to charge $99/year for, and if they can integrate all their tools well... it will make Android much more noticable, and THAT--I think--will more than make up for anything else.
Thus spake the master programmer: "After three days without programming, life becomes meaningless." -- Geoffrey James, "The Tao of Programming"