The early Android phones were equipped with a physical QWERTY, while the newer ones like the HTC Magic and the HTC Hero are iPhone like structures with full touchscreen. This adds a challenge to compete with the iPhone UI, something that is already backed by multiple touch.
An interesting comparison of the iPhone and the Android keyboard shows how Apple managed to crack a better on-screen keyboard while designing the button-less iPhone way back in 2007! While HTC is still trying to compete with the iPhone 3GS with its HTC Hero, I feel Android can beat iPhone only with quantity (i.e. the number of different Android devices) and not with a single Android powered phone – at least anytime soon.
The iPhone Help
The iPhone Help