I own both, I'm partial to iPhone, but this is a hard question to answer because there are good points to both systems. Here, I'll try to point out the good on both and see where this goes.
1. The eco system is more open. For instance, Swype told me that Apple won't let them ship its very cool keyboard replacement for iPhone.
2. Maps are better. Google Maps is way better on Android than it is on iPhone. Why? It has better graphics, better integration with Google Buzz, turn-by-turn navigation, etc.
3. Google voice integration is better on Android.
4. Choice of handsets is better on Android. On iPhone you only have one choice and if you don't like it for some reason you are screwed.
5. Choice of carriers (used to be a bigger deal when iPhone was only on AT&T, but now it's on Verizon too. That said, with Android you have choice of Sprint and TMobile, too).
6. Price. Generally Android-based phones are lower cost than iPhones.
7. Voice response. Talking to your phone generally is better on an Android device.
8. Integration of Google's services. Generally I like how Gmail, Google Calendar, et al, works on Android vs. iPhone.
9. More customizable. With lots of widgets for home screens, and different keyboard choices, Androids are more customizable. That said, I get Apple's point, too, that this makes iPhone generally more usable.
1. Apps are overall better quality. They do more, crash less, and are generally more mature.
2. There are more apps. Not as big a deal as it once was, but many businesses are still supporting only iOS.
3. I like the usability overall better. This is subjective, but I still don't like Android's usability overall as much. It feels clunky compared to iOS and just isn't as smooth to scroll around, or use and things just seem better thought out on iOS. I know lots of people who feel the opposite, though, so your milage may vary.
4. Integration with other Apple devices (my iPhone runs my Apple TV, for instance).
5. More third-party accessories. Generally iPhone, because of its standard connector, has a much better third-party accessory market, including being built into many new cars.
6. Stores offer more help. Compare the experience of walking into an Apple store and getting help vs. walking into an AT&T or Verizon one (I'm usually told to sign into the store at AT&T and wait my turn, just one small example of how the Apple stores do it better).
7. More bleeding edge apps. The photo above is of Otavio Good, author of Word Lens, that translates Spanish to English and vice versa. His app, and many other "bleeding edge" examples are only available on iOS.
8. Hardware feels better in my hands. I have many of the latest Android devices too, including the Galaxy S, but it just doesn't feel as nicely designed. Again, this one is subjective and I'm sure there are folks who will argue the other point.
9. Only developers care, but the tools and consistency of iOS platform makes it easier to develop on. They also tell me it's easier to monetize apps on the iOS platform. They tell me that they need to do a lot more testing of various devices on Android platform and that that platform has fragmented quite a bit. Which is why we still see better apps on iOS.
10. No bloatware. My Samsung Galaxy S came with 52 icons. The iPhone has a fraction of that many.
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