I'd say that Freedom is a good price to fool around, after you break $200 for an iPhone + Contract price, + $100 for SDK, + $1,000 for a basic Macbook for development (AFAIK you can only use Mac to develop for iPhone) you've got a $1,300 investment. I'd think that anyone serious about writing a iPhone program would do it after spending that much capital, however not everyone is willing to spend that much cash to fool around. The difference is that after that level of monetary involvement people want to make it back, or just want to make a product (IE, I spend $1,300 on nothing). However it stops people who wish to make a serious product but don't wish to be so financially involved.
IMO, Android hasn't really launched yet, and Google isn't pushing hard enough to counter the iPhone.