In my opinion, the hardware will not be on top for long at all. There are already devices with bigger screens. The processor will be topped probably within six months. Someone will do a large touchscreen with a portrait slide-out keyboard.
However, as far as webOS goes, I think it would require serious architectural changes for iPhone to beat it (though they'll likely bring out some features to keep up). I know less about Android, but it already has multi-tasking, so it will probably catch up with many of the features pretty quickly, but the overall look and feel might take a longer time.
If I were Apple, I'd be looking really hard at all of this right now. They have plenty of cash to make the needed investments. I would guess that if they were planning on bringing out another version of the iPhone soon, they'd delay it to upgrade processor, storage, and OS.
Having said that, it will be a lot easier for Palm to match whatever the competition comes up with tit for tat with their new OS. If the Pre does well, they'll have enough money to continue to keep the new product pipeline full.
So I see real competition in the smartphone market between iPhone, Android, and webOS in the future. I think this is good for us as consumers. I'm excited!