I have an iPhone 5 with 8GB free space and am experiencing lag and low frame rates quite a bit.
I understand hardware is required for the features to work. But to suggest zero fragmentation is reality distortion.
THe iPhone 5 and the 4" display was a step backwards in that regards, but still, you can safely target iOS 5+ and reach about 95% of active, current app-buying iOS users, or target iOS 6+ and reach 90%. But you can't do that with Android (yet) - targeting 4.0+ would lose you a lot of sales.
This will be fixed in the Android market in the next couple of years though, but until then, iOS users/developers/lovers can rightfully boast about "less fragmentation".