In my opinion, what Nokia is trying to do is avoid commoditization of mobile hardware. Symbian was no good for them in terms of features and performance requirements.
Going with Android will effectively make the phone hardware a commodity (like what happened with PCs). Just imagine, with Android becoming ubiquitous everywhere, how long until users are free to choose any mobile phone and transfer their full preferences and data to another Android phone. In that case, competition in mobile hardware industry will remain on the basis of price only.
What I feel is, Nokia is betting on WP7 to stand out from the rest of the pack (Samsung/LG/HTC) in order to maintain their market share.
Will this gamble pay off, only time will tell.