Nexus is necessary as long as Apple sticks around as a viable competitor (which seems like the foreseeable future). Without the Nexus line there's no counterweight to prevent the public from associating "Android" with "crapware", because every OEM has an incentive to take distribution deals from crapware providers, and nobody except Google has an incentive to preserve the reputation of Android as a slick, easy to use OS. The Nexus line is so that high-end influencers can show their friends how awesome their phone is, so that mainstream customers think "I want an Android phone" and not "I want an iPhone" and then can go buy from a wide variety of vendors if the Nexus itself doesn't fit their price range.

It was pretty much the same story with Windows - as long as Apple was a viable competitor PC clones were pretty decent, but once Apple started going down the tubes you started getting bargain-basement Windows machines loaded up with crapware. The Apple/Google rivalry has been really good for consumers, as Apple forces Google to get better at user experience while Google forces Apple to be more open and support standards.