A survey by AdMob shows that Android, iPhone and iPod touch users are all highly engaged with applications and frequently download them to their devices. However, Android has a much smaller base of devices and therefore has more upside ahead.
That's some serious engagement and a lot of runway for Android. Why? Android-powered devices---T-Mobile's MyTouch is the headliner---are hard to come by. However, that's changing as Motorola will be taking Android handsets to large carriers like Verizon Wireless in the fourth quarter.
Simply put, Android has a nice base of engaged users already. More distribution is likely to make it a more viable rival to the iPhone. Also see: It's official: Google and Apple are competitors (especially in mobile)
By the charts: