I don't think it's iOS7 alone that's the problem with Apple's very slight, almost minuscule loss in consumer satisfaction among its competitors. When you get right down to it, iOS7 is mostly a cosmetic change. It still performs and acts roughly the same as it did before.
I think Apple's biggest problem is that the competition is has finally reached parity with Apple on the UX front, and is starting to offer more in comparison. When you can get a phone that's just as snazzy and easy to use as an iPhone, has more handy features, and gives you more relative bang for the buck overall, well...it makes Apple look a little weak against the competition.
They've still got the best style and the major portion of market mindshare, but if Apple doesn't up their game, that won't last for long.
I think you're spot on. (I might be hijacking this comment for ranting) I will personnally be giving Android a shot when I upgrade from my old trusty iPhone 4. Android has really caught up in terms of apps, at least where it matters when speaking of phones. I can't seem to spot any difference in how fluid the Nexus 5, for example, is compared to newer iPhones. Google has really simplified the interface a lot, while providing a lot of customizability in Android.
From what I can tell, they're still suffering from some fragmentation. It appears the different screen-sizes and resolutions is not causing that much issue (it's an issue faced by iOS developers to some degree as well for the time being), but the issue remains that the distribution of software upgrades isn't anywhere close to how well Apple does it.
There's one thing in partucular that Google has implemented in Android 4.4 that I really like: a very good file system and cloud storage support. There are now API's that let developers register apps as file repositories, so when an app supports opening a file, you can easily choose between local, Google Drive-, Dropbox-, or Microsft Skydrive-files.
On iOS there is no way to do such things. Sure you can go to respective app and email things from there, but I can't do that when I've started writing an email already (or replying). Or apps must specifically use service specific API's for grabbing files, but that most often leaves me to either save the file in the app itself or specifically use Dropbox.
That seems to be the way Apple wants it, and a lot of users don't want anything more than that, but I think there are a growing amount of users that will accept the deminishing drawbacks of Android in order to be able to do these things.