One of the developments desperately needed by android is a hardware filter for their marketplace. Since android is available on different phone models with different hardware, not all of the applications will work on every phone. I've read a few stories from developers that say they don't want to develop for android because they don't know what the results will be on a user's phone.
If there was some sort of control on the marketplace that let a user only see applications that are supported by his/her phone it would remove some of the ambiguity developers face.
There is a point though, where hardware isn't the limiter, I personally prefer a keyboard to a stylus, and there's a lot of people that agree with that. I also prefer a full screen, and a few of the other luxuries that come with a PC/Laptop. PDA's and phones will never be able to supply that, no matter how powerful they become.