there are pluses and minuses on both sides of the fence:
iphone+ "walled garden" app store, meaning most apps have a substantial level of polish
+ only one (well, two now with the iphone4) hardware platform, so no wondering "will this app work on my phone"
+ more widely used platform, so more third party accessories; also, much aftermarket car and home stereos are 1:1 compatible with it
+ the iphone 4 has one of the nicest screens ever.
+ netflix streaming video works. (watch your data usage, though!)
+ can talk and surf the web at the same time.
- "walled garden" app store, meaning if steve jobs and crew dont like your app, it aint gettin published
- jailbreaking/sideloading discouraged, and without the ability to side load (download an app on your pc first), you MUST use apple's app store
- no physical keyboard on either hardware platform
- no free turn-by-turn GPS navigation. (plenty of purchasable gps apps though, im sure.)
android+ open app market. much fewer restrictions both on what is "accepted" and what you can actually program your phone to do.
+ easier to "jailbreak" your phone.
+ multiple platforms to choose from to suit your personal taste.
+ physical keyboards on some models.
+ FREE GOOGLE MAPS AND NAVIGATION (turn by turn nav). (this was a major selling point for me, i couldnt live without it.)
- open app market. with fewer restrictions comes many more crappy apps, so you have to dig through the crap to get the goods.
- multiple platforms, so sometimes an app will not work fully with your model.
- fewer aftermarket accessories. (but that is changing!)
- i dont know of any car stereos that natively support android-specific mp3 players. (usually if it supports anything, it is either ipod and/or "everything else")
- cant talk and surf at the same time. (that will undoubtedly change in the future though.)
i have a motorolla droid (original) and love it most days. the free gps/navigation was a MAJOR selling point for me, and both programs work absolutely flawlessly -- as well as my sister's tom tom, if not better. call clarity is pretty excellent, and (on verizon) i have been EVERYWHERE and never been in roaming. game support is good and getting better, especially with popcap (bejewelled, plants vs zombies, peggle) starting to program for android. if you like old school console emulators (NES, SNES, etc), android is your only way to go -- apple will never approve such apps. keyboard also works very well, which was another deal-clincher for me. swype is also becoming really popular (tho i suspect the iphone has/will have that as well). for me, the less-restrictive nature of the OS is also a great selling point, but many folks might not care about that.
that said, the iphone 4 is a ridiculously solid platform as well. personally, i would avoid at&t and get (slightly weaker) verizon version just to have verizon's coverage and customer service, but YMMV.
long story short: android phone for quantity of apps and applications and free gps. iphone for quality of apps and compatibility with aftermarket stuff.
hope this helps.