I recently had a Galaxy SII for all of 3 weeks before it got stolen.. Now I'm back to my Iphone 3G from 08 for the time being. Obviously there's no comparison between them hardware wise, especially since IOS4 turns the 3G into a smoldering shitheap. But really, that SII was incredible. The 1.5ghz dualcore and screen alone smoked the 4S. Out of the box, did so much stuff that the iphone would never do, in some cases jailbroken or not. I was sitting on a ferry, decided to hit a streaming cartoon site, the episode loaded up and went into fullscreen, played via flash without fuss at all. Another time just out of curiosity, decided to see if i could hit a filesharing site and download an episode of something. via 4G I just let the download run in my pocket while i was walking around in a store, by the time i was out of there a little while later it was finished and ready to watch on the bus, no jailbreaking required. Very rarely encountered performance issues even when I was using MSN, letting Soundcloud run in the background, then going back and loading a webpage, etc. Add to that that you're not held hostage via iTunes for PC connectivity, and there's really no questions, when I can afford it again I'm going right back to whatever high end Android phone there is.
So basically, I really think Apple is going to be fighting an uphill battle against the top tier android devices if they refuse to make a model with a bigger screen and less restrictions. The only real edge I see it having at the moment is of course in application base, and specifically the music/creative apps that android seems to totally lack. Give it a year though, that gap is going to close, android devices are going to increase power-wise much more frequently than the once a year that Apple releases a new model, and I think a lot of people that 2 years ago would have never considered android will be re-evaluating their brand loyalty.