There is no doubt about that. I agree in someways the iPhone is way behind but I don't buy new phones. I'm on a £10 sim only deal with O2. I got my iPhone 4 for next to nothing. The screen is smaller but IMO its nicer than the g2s screen. Most newer phones are packing some fast processors but in someways aren't as smooth or fast as androids. Apple only has to make IOS for a limited amount of hardware condigurations but andriod has to work on nearly everything. If you paid 5-600 quid you might be annoyed but I didnt. I honestly think the iPhone is more than the some of its parts and that's due to IOS. Saying that I bloody hate whatever they use on their laptops. As I've said I've used some of the top android phones and for me personally they still have some way to go.
I'm pretty sure in the next couple of years though unless iPhones start trumping android in hardware AND software its going down. Android does get better ever year aswell and at the rate it's catching up apple will have to start innovating again. Other wise apple will turn into the new Nokia.
APMSL
The brand spanking new iPhone 5 has a smaller screen than an S3, no NFC, no HD output, no drag and drop from Windows, a slower processor, shorter battery life, less camera options, you cant upgrade or replace the memory or battery, it wont run Flash or Java and you need to replace every connector you already have.
Ive got nothing against iPhones, they are easy to use and all that but it seems that once again Apple are recycling existing technology and charging a lot of money for it.