Google aren't doing this out of the goodness of their hearts. Just like with WebM/VP8, there's huge commercial value in this for them. This doesn't make the project any less worthy, but their OSS approach shouldn't veil their corporate gain.
On the contrary, that actually makes it more worthy, since they're providing a clear example of how a publicly-traded company can profit by being a good corporate citizen.
So yes, it is good to show that there is a way to make money giving away open source software, but i'm not at all convinced it is an example other companies out there right now could actually follow. Google is in a position where they can make lots of money off of people's attention without directly taking their money, so they can afford to give away a MASSIVE piece of software to anyone who asks. Who else could do that? Maybe Microsoft. But I can't think of anyone else. The amount of money and man hours Google has spent on Android must be truly staggering, the fact that they can recoup it on advertising dollars alone is really, really impressive.
The reason the iPhone (and more recently Android based systems) are doing well is the great software, which has been lacking since phones started doing more than calls & SMS.
For the good of humanity this part of phone development must be taken from the phone makers hands. The next greatest thing to come out after sliced bread will be an Android -Lite for use in normal, low end phones, I look forward to this day with bated breath(Google Android developers, if your reading).