I have friend who still uses a first generation iPhone and is miserable. It does run the apps but the hardware is too slow for the experience to be any good.

Apple owns their stack top-to-bottom. They dictate how their devices are built, how carriers will work with them, and every aspect of the experience from start to finish. Comparing the G1 to the first iPhone on the basis of software compatibility ignores that Google and Apple operate in very different environments.