For most non-independently wealthy individuals, it boils down to the issue of cost. 

A 64GB iPad 3 retails for $699. That is a lot of change for a tablet PC. Many decent full function laptop PCs could be bought at the same price. 

If money is no object, great; buy a 64GB iPad 3 4G for $829. 

But if the primary use of the tablet is for web browsing via WiFi, viewing media, reading e-books; the Kindle Fire is a mere $199. That's a big difference. 

I'll say right now that I think the quad increase in resolution of the iPad 3 over the iPad 2 alone makes it worth the extra $100 (considering that it costs an extra $100 to upgrade from 16GB to 32GB and another $100 from 32GB to 64GB). But for most buyers, cost does matter, meaning in most cases, it will be the bottom line. 

I agree, though I wouldn't call it "creeping". I'd say Android is catching up through "bludgeoning the market with phones while maintaining a pretty piss-poor sell-through per customer". 

If Google fixes their fragmentation issues, yes. But they're not taking any logical steps to do it. They continue to allow carriers and manufacturers to control update schedules. They continue to allow carriers and manufacturers to drop support for a phone entirely, like HTC/AT&T did to my top of the line Inspire six months after launch. I don't see Google fixing their fragmentation problems. I see them continuing to muck this up until Apple completely stablilizes their marketshare and someone else (Microsoft?) start to shoehorn in on top-end phone sales. Android can continue to dominate the bottom tiers of the phone market with this strategy but in the long-term their absolutely atrocious handling of hardware support is going to bite them in the ass on upper-end phones. After what happened to my Inspire (one upgrade to 2.3, still buggy, no plans to update again), they've lost me as a customer. Fuck them. I didn't spend $100-200 on a highly specced phone to see it get one update and then be left on the vine to wither when it has plenty of horsepower to run ICS (1ghz Snapdragon, 768 RAM). I never thought I'd say this but there's a damned good chance I'm going back to iPhone unless WP7 can lure me over. I can't be the only one who feels this way, either.

If MS gets Nokia rolling with more/bigger phones like the beautiful Lumia 800 and if Apple finally pulls their head out of their ass and launches a 4" iPhone, watch out Android. And if Microsoft can make ground on the upper end of the phone market, they'll have no problem attracting developers. Those are the customers that spend money and developers love to work with Microsoft. They have developer support down to an art and know how to avoid the many pitfalls Android has fallen into over the past three years.