But in a piece in the New York Times, Nick Bilton explains it better than I can (relying on Chad Dickerson of Etsy):
Chad Dickerson, chief technology officer of Etsy, received a pre-launch Nexus One from Google three weeks ago. He said Google’s phone feels connected to certain services on the Web in a way the iPhone doesn’t. “Compared to the iPhone, the Google phone feels like it’s part of the Internet to me,” he said. “If you live in a Google world, you have that world in your pocket in a way that’s cleaner and more connected than the iPhone.”That pretty much sums it up for me, too. It's the Internet in my pocket.