Multitouch would have given the iPhone an advantage for a generation or two, until other manufacturers integrated it into their devices. The launch of the AppStore made it much more versatile and fun, and was a much harder feat to replicate.
Between an SDK built on top of the excellent MacOS X -> iOS operating system and services, the world class developer tools that came with all of that, and the sales model of the AppStore giving every dev easy access to essentially every iPhone user in the world, the only way to compete would be another similar software stack-- ie. Linux -> Android. This completely undercut all of the technical capital the existing players had built their products on and forced everyone to start from square one, well behind where Apple had already gotten.