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That is part of it, it is like people don't grasp the idea that IPhone OS can evolve overtime. More importantly higher performance computing hardware can do a lot for new features.
The key element here is understanding that iPhone and it's OS are constrained by screen size for one and RAM for another point. The tools and libraries that iPhone OS is built upon are very powerful. It is a simple matter to extend them to deliver more advanced behaviours. I actually see people that pigeon hole the Touch into a limited device due to the OS as being very ignorant. The vast majority of the tablets limitations are directly due to hardware not the software.
Dave






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