This year's all of the attendees of Google IO conference in San Francisco were nicely suprised by a generous gift of the newest HTC "Magic" (AKA G2, currently on ebay for $405) UNLOCKED Android phone, along with the T-mobile unlimited 3G 1 month SIM card.
The new handset has a very beautiful design similar and on par with iPhone, no external keyboard.
The Android operating system, in my opinion, does not come close to the user experience provided by almost 2 year old iPhone, as if Google did not learn anything during this time, but the situation for Android is now that simple...
Couple of the challenges Android team faces are the patents Apple has on some of their cool solutions (hand gestures) as well as not knowing on what hardware configuration the Android will run: keyboard, or now, trackball, or not, flip screen, or not, screen size, etc.
I see a bright future for Android even if it may not be able to match iPhone in it's user experience.
Android is open source and written in Java which automatically enables thousands more developers to improve it, and write applications comparing to relative handful Objective-C developers for iPhone.
With time many manufacturers will be releasing phones with Android as their operating system, I am sure that trend will increase and Android will "graduate" from it's current status of "geeky, Linux-like mobile OS" to the "Microsoft of mobile OS" as far as number of users goes and hopefully close to the Mac's user experience.