From experience in other (but similar space) domains, configurable hardware doesn't allow for the most robust, enhanced & optimized software. I'm trivializing it a bit, but long-story-short: iOS is what made the iPhone what it was...
iOS was undoubtedly a game changer... in 2007.
I would argue Apple made a phone that was years ahead of the competition, which gave the iphone an unbelievable advantage and their practice of strictly limiting what the phone can and can't do works well with their market base that just wants products to work (non-upgradable laptops, imacs, etc.). Every other "smartphone" in 07 was a bad copy, and few "just worked". Android came along and the OS developed to a polished product. Were pretty far from the original release of the iphone; most phones now operate in basically the same manner and "look" the same to the user. Icons, app stores, camera, texting; it's all the same.
The OS differences might matter to some users, but a lot, and I'd say the majority of people who want a smartphone are deciding by specific features ("better" camera) and design aesthetics. My wife could care less about iphone/android, 64 bit architecture, and custom roms, but 4in vs a phablet is a huge deal. For people who don't need some specific high end spec, a phone that is customizable, but at the same time is easy to use and "just works" could be a huge deal. The nexus line shows a phone will sell very well if it has good, but not cutting edge specs, so long as the design hits the mark. I see this as an evolution of mid tier phones.