I'm not sure either, but I think screen size/resolution/aspect ratio and different hardware "tools" (ie cameras with different resolutions, does it have one led or 2 for flash, etc) have potential to be problems.
I don't buy this line of argument regarding app design.
Next time you fire up your image editing program on a PC resize the window to 90%, 70%, 50%, 30%. Try and use your application.
At the smaller windows sizes you just can't. There is simply not enough real estate to accommodate the UI.
Desktop applications have simply assumed you have a certain amount of real estate at some given level of technology. Anything better is usually just gravy since you have everything you need on your screen.
We know simply resizing does not work. Just try an iPhone app on an iPad at 2x.
I'd wager the points where you have to reconsider the UI are much closer together at small sizes. An extra half inch in screen size could allow just one more icon and make your app that little bit nicer to use.
Even if you fix the hardware compatibility problem (they solved it for PCs) it's still going to suck without new ways to design apps.
I'm going to go out on a limb with this claim: Developing Android apps that run across different phones really isn't any harder than developing Windows apps that run across different PCs.
The real issue, I'm convinced, is that a bunch of people with no previous development experience jumped in with the iPhone gold rush. Then these people decided to branch out to Android and are shocked and horrified when something works slightly differently on their customer's phone than when it does on their phone.
God forbid that these people should every try developing Javascript applications that have to support support IE. :-D
Almost all PC screens are big enough that you can do a reasonable application design that works well on small and large screens, at least for most applications.
I'd like to hear more on this issue though.