I used to keep buying into the hype and rail against iPhone and for Android. Now having owned both, I recognize that the comparison itself is silly. Aside the "totalitarian regime" vs "pseudo-capitalism" difference in the platform philosophies, the products are like apples and oranges (pardon the pun). Its like comparing an old school word-processor and a computer(for fairness sake equally old-school) . This is not meant to belittle iPhone, but it is NOT a real smartphone. Its a really advanced feature phone.
The difference is that the "smart-phone" is like a computer, you can add/remove programs and alter how it functions so that it can be "smart" for your specific purposes - while the "feature-phone" is more like an appliance that offers certain features in a specific way. iPhone does have PIM capabilities that used to be primarely the domain of the smart-phones and even apps that make it seem like a smart-phone - but the capability of those apps is strictly as add-ons to the main appliance - not an extension/replacement of the OS. I mean, even 10 year old Motorola flip-phones - not smart-phones by any stretch of the imagination - had both PIM and apps capabilities.
Now, as far as features are concerned, iPhone is the best feature-phone by miles. Its amazing how much it can do and it keeps on stepping on the smart-phone territory more and more with new features in each release. Being a locked down feature-phone also enables it to have the best polished UI over the smart-phones - much easier to QA when. (Now, as an aside, I am not talking about jailbreaking, which does make iPhone more like a real smart-phone, albeit somewhat buggy as the developers have to constantly find hacks to insert functionality into existing code)
Android, on the other hand, is a whole other beast. It IS a smart-phone with all that it entails. You do not like how the on-screen keyboard works? You download one of the many other input methods (Swype rocks, BTW!!!). You do not like how SMS works? Go get a different SMS client. You do not like how mail works, there are many email clients to choose from. You want to have more than two sound profiles? Sure. You want to change the phone's configuration based on time, location, calendar, etc - no problem. You want to run something that will bring the phone to its knees and drain the battery in under 2 hours - of course you can get that too.
Does this make Android better than iPhone? Maybe - maybe not. It all depends on what YOU want. For me, I could not stand using the iPhone for all the restrictions on how to do things. But I thats why *I* want a smart-phone.
Still, I will admit that while there are many choices for certain functionality on Android, the iPhone's default, unchangable, functionality is very good, in some cases better than Android. Plus there is the "Windows" factor with iPhone being the defacto "Windows" standard of the apps market, there are more mature apps on iPhone platform than on Android (Hey, Amazon -- Summer is here, where is my Kindle App ????)
In short, if you are satisfied with what that iPhone offers - it may be the best thing out there for you. I highly recommend iPhone for older and less technical folk that don't demand much and just want something that works. If, on the other hand, you are more demanding and want something more than iPhone offers or more custom - iPhone is simply not good enough, and Android is your best bet by far.
As I mentioned there is also a philosophical issue of the tyrannical approach of "Big Brother Steve" vs free-for-all nature of Android development. This is not as clear cut as it appears, but more of an issue of personal philosophies thus the big debates on issues like government run health-care in the US. But it all boils down to - do you trust your dictator or does possibility(not existence) and freedom to create a better option outweigh a known entity you have no choice over. Like I said, its a personal decision and not as clear cut as it appears.
-Em
