I think you are falling into the 'nobody will ever need more than 640K' fallacy. New applications will come along that demand hardware improvements. In fact I'd

I think you are falling into the 'nobody will ever need more than 640K' fallacy. New applications will come along that demand hardware improvements. In fact I'd say hardware feature innovation is partly responsible for the iPhone's success - the accelerometer and the finger-touchable screen (granted this was also software). Having one of the largest screens also helped. I think we are just at the cusp of hardware innovation in mobiles.