iOS was also pretty bad before 2.0, although I have to say it hasn't really improved much since then, and WP7 is already past what iOS had for 2.2.1, and with C&P in the next update will have surpassed 3.1.3 and arguably 4.2.1 by then. That's pretty good starting out, when it only takes them 1 or 2 updates to catch up with iOS.
Android might take a bit more for WP7 to catch up with in all areas, but it's also taking a different approach so it's less of a direct comparison than iOS is.
The reason WP7 isn't selling so quickly is people are waiting for the updates to cover the features they need. People who don't need anything specific (much like early iPhone adopters) are quite happy with WP7, it's the people who are reliant on a specific app or feature who are holding off (in my case it's Google Maps for transit directions - although ignoring that Bing maps works better, and before switching to Mobilicity SIP). Some of the app dependent stuff WP7 might never get, but it'll also get a few here or there that aren't available on other platforms. Also, once it has hit a couple updates it'll be the most appealing first smartphone for people who haven't had one before.