People tend to like iOS better because the app ecosystem is better and it is that way because of restrictions. The restrictions aren't necessarily the exactly correct set to achieve the quality and profit apple seeks, but if they were all that terrible, the iOS experience would be terrible and it isn't.
It'll essentially keep staying just bad enough that it doesn't get regulated to hell or abandoned by users... and no better.
People are generally upset because the barrier for entry to create an app is low and the profit for winners can be very high, which means there are an enormous number of people trying and regulating that is hard.
I can’t speak for you but I know that I am prone (as most humans are I think) to project myself on others.
I use iOS because it’s the only OS that runs on Apple-designed mobile silicon, which is extremely good in terms of performance. Also (and this is not a joke) my partner hates green bubbles. You may be surprised how many people feel that way, which I personally think is kind of a shallow opinion, but it’s a real reason more than one person has stuck with iOS. Some people buy it as a status symbol because it is a fairly expensive phone, beautiful (imo) and apple advertises well. Some people can’t buy it because Apple has a great and widespread repair network. I know for a fact that a great many people share your opinion and buy iOS phones because of the App Store, that said I don’t think it’s safe to assume it’s the only or even the primary reason people do it.
The app store moderation isn't the only dimension of the quality of the ecosystem, but it has a significant effect.
I have a mild preference for android, but it was more or less just luck which landed me on an iPhone for my current phone. It literally came down to which one I could acquire quicker after I destroyed my old phone before an extended out of state trip. The Pixel I bought is still in its sealed box because the shipping was delayed while I literally picked up an iPhone from the Apple campus store at the last minute before my flight.
Are there any signs that iOS is significantly worse than Android with regards to innovative apps?
Some major pieces that are missing from both are the ability for user-installed apps to auto-update without using the system app stores and the ability for a user-installed app to process call audio.
If you're building a to-do app supported by a monthly subscription, there's no shifting foundation there. If you're building a free-to-play game whose in-app purchases consist of "handful of gems," "bag of gems," and "trunk of gems," you have nothing to worry about from App Review.
If you're building something without obvious precedent, however, trying to break new ground in the spirit of tech entrepreneurship – the answer is no longer so clear-cut. And so the App Store has in many ways self-selected developers for "safe" categories over the past decade, and yes, many of these have found great success (even if that half-trillion dollars tends to follow a power law with most of it going to the top earners in each category).
What the App Store is definitively not, however, is conducive to innovation, experimentation, and risk-taking. There are outliers, of course, who have managed to do something novel within the constraints set down by Apple. But the biggest risk you take when building your business on the App Store is not that your product will fail in the market, but that Apple will prevent it from ever reaching the market.