Just having gone through about 18 steps to install Python 2.7 on my server because we have code that only runs in 2.7, while most of the operating system only works with 2.6 and breaks with 2.7, and seeing all the backwards compatibility cluster fuck that is Python3k, I think anybody would be crazy to base an operating system like Android on Python.

You can't have backwards compatibility and your progressive "keep language simple and clean by dropping features" at the same time.