I wouldn't even say Android is that far behind. It's lacking polish, to be sure, but there isn't anything I cared to do on my iPod Touch that I can't do on my Nexus One. And the N1 offers me some things the iPod couldn't do, even ignoring the GPS, camera, and phone functions. I find the N1's interface to be a lot prettier, too (but I suppose that's a matter of personal taste).
Android is a few years behind IPhone but is gaining traction. I seriously do not feel like Android needs much help. All it needs is just time and have Apple continue to try to put tight controls on its ecosystem.