Developer track record with Android updates is terrible. You're talking about the theoretical advantages of Android, but in practice they don't exist. Hell, they don't even exist for the N1 - Google just gave up on fixing problems.
Scaling down isn't good. It leaves you the same place it left N95 users - with powerful hardware that no developers take advantage of. Sure, if you get a cheap Huawei you get yourself a decent Android with some nice features, and for the price it's a good deal, but if you get a Galaxy S there's hardly any software out there to take advantage of it. WP7 scales up, in a couple years 800x480 won't seem like a big deal, it'll be on cheap phones, and you'll have some low and midrange WP7 phones made to lower specs, with a large degree of already available software, while newer hardware has been released and new software gets put out to take advantage of it.
Fixed resolutions and constrained hardware is what got iOS so far ahead among developers. It's easy to develop for if you have one hardware form factor (plus keyboards, optionally), one resolution, and one hardware platform, with a few more added on. Hell, limited multitasking makes it easy to develop for as well so you don't have to worry about compatibility problems. All that which made iOS take off and completely spank Symbian is what WP7 is doing. It has some holes now, but they're getting fixed a lot faster than Apple did, and with a couple more updates it'll be up to speed with iOS and quite a bit ahead in other areas as well.
