T.S. Eliot did write something like it:
"One of the surest tests [of the superiority or inferiority of a poet] is the way in which a poet borrows. Immature poets imitate; mature poets steal; bad poets deface what they take, and good poets make it into something better, or at least something different. The good poet welds his theft into a whole of feeling which is unique, utterly different than that from which it is torn; the bad poet throws it into something which has no cohesion. A good poet will usually borrow from authors remote in time, or alien in language, or diverse in interest."
That quote was subsequently used in a biography of Picasso by John Richardson. Maybe that's how Jobs came to remember it as a quote by Picasso.
http://nancyprager.wordpress.com/2007/05/08/good-poets-borro...
Hence, it seems like Jobs' version "Good artists copy, great artists steal" was an original.
There are lots of great things that have come about from people improving on others ideas. The car was a huge improvement over the horse, but lots of different people since then have made important improvements.
As Android interfaces have pretty much universally been worse than iPhone counterparts, I'm all for people copying something that improves them and improves the overall quality of the store.