I think - when we see what they have in store in terms of mobile applications - we'll get it. Just look at the companies they have been buying...
As a UK mobile user, this move doesn't surprise me at all... People here aren't so carrier-loyal at all, and wouldn't hesitate to change for a better deal. Brand loyalty is much stronger - people buy Nokias because, they say 'I know how it works'. Sounds like functionality loyalty to me - a much easier nut to crack (word of mouth).
In general in the UK a phone contract is up after a year or 18 months and all carriers provide a service to switch to them and keep your number. It's so easy.
If Android provides a great OS that is easy to use and has loads of good functionality/applications AND hardware providers put it on desirable models then people will buy it for sure. HTC already have a pretty good touch screen phone that with a good OS could be a winner.
I've had a couple of MS smartphones and they leave so much to be desired and I don't fancy an iPhone at all for lots of reasons.
Actually this move is a no-brainer for Google. What's the competition for a mobile OS? Symbian (no branding, bad internet connectivity)? Windows Mobile (horrible usability and stability)? iPhone (you'll use your phone how we want you to use it)?