The open nature of the PC wasn't inherently what brought it greater success. The open nature of the PC meant that it could spawn an ecosystem of third party hardware vendors, sure. It also meant that it could be cheaply cloned by other manufacturers, ensuring competition that drove down the price of hardware. The net result? x86 is ubiquitous, sufficiently so that even Apple use a basically standard x86 platform these days. Low prices and the wide availability of software that people wanted to run bought the PC the marketplace, with Microsoft being the real winners. Apple hardware remained more expensive for years, and the compelling MacOS software was mostly limited to areas like DTP. Nobody else had any incentive to buy a Mac.
Now, let's look at the phone market. Third party hardware vendors? No real distinction between the iphone and anything else. Sure, anything remotely clever has to plug into the dock port, but developing something to work with that also gets you into the ludicrously huge ipod market. Other phone accessories are either batteries, chargers or headphones. That's really not going to be what determines market success.
Competitive cheapness? When you have a multivendor OS like Android or Windows Mobile, you might expect there to be more opportunity to compete to undercut each other, offering equivalent platforms for less cost. But that's missing something. In the same way that the home computer market has basically consolidated towards PCs, the phone market has already consolidated. Your smartphone has an ARM in, probably along with an off the shelf GSM chip and some 3D core (generally something from Imagination, though in Android's case Qualcomm seem to have come up with their own core - I haven't been able to find out if it's derived from something else). There's no realistic way to make a phone with equivalent hardware functionality and quality to the iphone and sell it for significantly less money. And if you figure out how to, Apple get to take advantage of the same price reductions in their next generation hardware. And, being Apple, they'll probably find some compelling wonderful design feature that costs them nothing extra but makes you want it more anyway. So hardware competition probably isn't going to be what determines market success.
Which leaves two things - advertising and applications. Apple are good at marketing. This is unfortunate, because I'd really rather live in a world where everyone running MacOS was running Linux instead, but we seem to suck in comparison. The good news is that Microsoft also seem to, so maybe we'll have our act together some time between now and Apple crushing us to death. So, assuming current trends continue, Apple's marketing probably isn't going to kill the iphone. Which leaves one thing: applications.
The obvious argument against the iphone's success is that, as a closed software distribution platform, it's less attractive to developers. I don't think that's true. If we look at the console market, the gp2x was hardly a PSP killer. Or a DS killer. You could possibly argue it was a Gizmondo killer, but only if you ignore the Finnish mafia. Being an open platform doesn't immediately result in you killing closed platforms. You need developers, and you need applications. Otherwise nobody's going to buy your hardware, even if it costs $10 less than an iphone and has a few extra bits of plastic. What attracts developers? An attractive development environment and a revenue stream. Android has one real thing going for it here - it's not tied to Objective C, and so there's probably a larger number of potential developers. But let's be realistic. If you're a competent developer, you can move from C++ or Java to Objective C without too much effort. And if you're an incompetent developer, you're not going to be deciding the future of a platform.
Apple have made it easy for people to write applications that share the iphone's delightful UI. There's almost active encouragement to write beautiful programs that integrate well. Sure, the platform limitations bite you in weird ways (like the no background running thing), but Apple have come up with hacks to smooth most of those over. The iphone is a wonderful device to develop for. Sufficiently delightful that there was a huge developer base even before Apple had released the SDK. What does that tell you? Developers actively want to write for the iphone. In fact, they wanted to even before there was a real revenue model. Mindshare means a lot.
What are we going to see in response from Android? To begin with, uglier applications. I'm sure that'll get better over time, but right now the Android UI just isn't as well put together. It's functional, even attractive. But it's not beautiful. And lowering the bar to developer involvement means the potential for more My First Phone Application. Windows Mobile and Symbian have huge numbers of applications. They're mostly dreadful lashups of functionality you'd never want and a UI that's ugly enough to make you want to stab out your eyes, coupled with a nag screen asking for a $10 donation to carry on using it assuming it hasn't crashed before it got that far. To be fair, a lot of iphone stuff isn't much better. But proportionately? Right now the Apple stuff has it. I never want to see another listing of Symbian freeware.
At the moment, Apple wins at providing compelling applications. They may be a gatekeeper between the developer and the user, but right now that's not causing too many problems. Well. It wasn't. The recent fuss about Apple dropping applications because of perceived competition with their own software is an issue. If a developer is going to spend a significant amount of time and money on an application, they want a reasonable reassurance that they're going to be able to ship it. And, right now, Apple's not giving that. It remains to be seen whether this has long term consequences, but there's some danger of Apple alienating their developer base. If those developers move to another platform, and if they create compelling software, Apple might stand some real competition. At the moment? Apple has the hardware, the OS and the applications. They have the potential to take over broad swathes of the market. But they also have the opportunity to throw it away. And that's what's going to decide the success of the iphone - a closed platform is not inherently a problem, but it gives the vendor the option of removing one of their key advantages. If Apple get through this with their developer popularity intact, I don't see the open/closed distinction as having any real-world importance at all.
The relevance to Linux? We're not going to succeed by being philosophically better. We have to be better in the real world as well. Ignoring that in favour of our social benefits doesn't result in us winning.
 It's slightly more legacy free than a "genuine" PC - there's no i8042, and things like the gate A20 hack aren't implemented. But it'll boot DOS (given enough effort), so hell, it's a PC
 And yes, I genuinely do think that the iphone's UI is better than anything else on the market. There's no reason someone else, including us, couldn't have got there first. But we didn't, and now everyone gets to play catch up. Shit happens
 I have no idea where Apple gets its UI engineers from, but someone needs to find the source and start waving huge piles of money to pick them up first.