Apple has a closed wall approach to their applications and controls the marketplace with a firm hand. In exchange, the end user gets a reasonable assurance that their environment will have as few problems as possible. It's when you stray off that reservation that you take the risk into your own hands. Sure, you can jailbreak your phone, but don't expect Apple to honor your warranty when they specifically warn you that such behavior can void your warranty.
On the other side is Android. Instead of the OS developer creating a closed wall, they make the marketplace wide and open. The carriers try to step in and put up walls both to protect their business model and to protect their customers, but the customer is just as capable of overriding the safety mechanisms and taking their chances.
As far as functionality, I think both iOS and Android are on even footing, as long as Google and Apple continue to invest in future development. They both run on essentially the same chips, so hardware specs should remain relatively similar. The only space where the two will differentiate themselves will be feature sets and security.
Moving forward into the future, I can see more and more malware developer targeting smart phones. This will especially become more problematic as more and more people use their phones to conduct financial transactions. Google will have to take a more active role in fighting these attempts to steal customer information. At the same time, I see Apple having and easier job fighting these incursions since they have the mechanisms in place already to detect problems and shut down malicious apps before they get distributed.