Dude, as much as I like Android, I know a lot of iPhone users aren't interested in switching. People have invested in the app store already, and there is also the RDF to overcome. Many people, especially those who aren't technically minded, have it set in their mind that Android will never ever perform as well as or better than iOS.
Apple should not be too worried about the customers they have, as you have said there are significant barriers to switching once you are on a platform. What Apple needs to worry about are the customers coming from dumbphones, feature phones and coming from Symbian, possibly BB too. Apple need a strong array of devices in Budget, MidRange and high end to compete with Android. For this reason I do believe there could be three handsets in the Holiday iPhone lineup
iPhone 4 (8GB and run-out 16GB, 32GB)
Budget handset Aimed at PAYG, $0, or free from £20/month in the UK. Think BB Curve, HTC Wildfire S
iPhone 4s (A5 processor, 1GB RAM, 5MP camera, Improved antenna, offered as 16 and 32 GB, possibly 64 gig too)
Mid-Range handset $99, or free from £30/month in the UK. Think HTC Desire S.
iPhone 5 (A5 processsor, 1GB RAM, 8MP camera, teardrop form factor)
Premium handset $200, free at £40/month in the UK. Think HTC Sensation, Samsung Galaxy S II
Logically you wouldn't call the 5th iPhone the 4s unless you planned something else to be the 5. I honestly believe that Apple needs this spread of handsets if they are to maintain market share. The 'tweens' are likely to have an iPod or iPod touch, but the parents are unlikely to want to give them an iPhone at its current price point. Capturing them at a young age is crucial as they are more likely to go on to buy more iPhone and Mac products as they grow older.