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I agree the whole Apple Nanny mentality is challenging to me. However if anything is going to kill Android it's the fractured market. Too many different hardware specs and incomplete implementations. I think the biggest challenge to iPhone is going to come from Windows Phone 7 with a more unified hardware spec and OS and Microsoft's considerable knowledge of SDK building and their user base, it's poised to be a good competitor. They are much more nimble in some ways than Apple, and certainly have a better history with transparency.
That said I love the iPhone and I will love my iPad too, I am really hoping for some competition to really increase functionality the end users.
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