It's too bad patents have become what they are. They're no longer a specific invention, but a widespread set of ideas or theories. These are hard to patent because many people can think alike, and whoever gets the patent for their idea first wins.
It's unfortunate, however I'm guessing that Apple is suing not over the hardware used, but specifically HOW it is used in conjunction with the OS and other HW pieces.
As said above, the lawsuit is also most likely over custom software that is not specifically related to Android itself, but was developed by HTC.
As for suing Google, I think they would do it if they had reason, I don't think they're scared into not suing them. Suing Google would do a lot for them, Google is becoming their major competitor in the phone OS market, and until W7 Phone, Android is the only true competitor for the iPhone in terms of OS, although you could argue that Palm's WebOS has a fair share, but not nearly the majority Palm used to command in the PDA market.
Not that I agree with what Apple is doing totally, but I assume they have a decent reason with specific encroachments on their patents.