I absolutely agree with Steve Jobs on this one.
Ask a group of people what they want, find what seems like a compromise that everyone likes, and you will end up with a camel. (aka Metro)
Alternatively, you could go out, design what you think a lot of people will want once they see the final product, and you end up with an iPhone (or Linux, come to that). People see it once it's finished, and then say "I could never have imagined something that cool, I want one"
This is where Jobs is coming from when he says "people don't know what they want". It doesn't mean that he is forcing them to take some POS that they don't really want.
He is just stating the fairly obvious truth that the majority of us are not capable of visualising a complex product such as an iPhone in all it's detail. But if you produce something really really good then people will want it, even if they didn't know that they wanted it before they saw it. In the same way that people want Mercedes and BMW cars, or Phillipe Stark watches, or any other beautiful, well designed product. (And while opinions may vary on whether any of these products are beautiful or well designed, at least enough people think that they are to make the companies that produce them rich.)
There's a lot to be said for the benevolent dictator for life approach. As long as they are benevolent. And right.(and called Linus ;-)