Yeah, Sony did mess it up in a few ways, they waited way too long to launch it and it didn't get updated fast enough. But yeah, for pics and vids it's easily the best Android device out there.
Despite it's flaws, for it being their first Android phone it was still impressive. I liken the situation to Samsung and LG. Both of those companies offered horrible Android phones at first. Then look. They both massively stepped their game up and now both have some of the best Android devices out there and some incredible stuff in the pipeline.
Sony is the same way. They are betting BIG on Android this year. They just announced that all Playstation 1 games will be coming to Android, for phones running Gingerbread and beyond.
And they just announced the Xperia Arc, which looks excellent. Once this comes out, it'll take the crown for best pics/vids as well as more than holding it's own over other high end devices from other companies.
4.2" screen and it's crazy thin too. Just 8.7mm. Even at it's thickest point you can see it's just slightly wider than the headphone socket:
And have a read of this regarding it's camera:
Not forgetting the Xperia Play (aka Playstation Phone):
which in combination with all those PS1 games, and other emulators, is gonna be pretty awesome.
Combine those with the LG Optimus 2X, LG Optimus 3D, Motorola Atrix, Motorola XOOM, LG G-Slate, HTC Thunderbolt 4G, Samsung Galaxy S2, Samsung Galaxy Tab 2, HTC Inspire 4G, Dell Streak 7, Sidekick 4G, Vibrant 4G, HTC Flyer, HTC Scribe, Droid Bionic and Motorola Droid X2 (Daytona) and you are looking at one HELL of a year for Android and it's only February, and no doubt a bunch more devices are gonna get unveiled at MWC.
Throw Google Music (a game changer) into the mix. Throw Google TV finally getting Android Market into the mix. Which might well launch with the new web-based Market too. And then there's Google I/O in May.
If 2010 was the year that Android began bitch-slapping iOS, RIM, Symbian etc.... 2011 is the year that it decimates them into little pieces. There's already rumors that RIM are considering doing a deal with Google to run Android apps on Blackberrys through a Dalvik Virtual Machine. There's already talk of Nokia's new CEO saying they need to start building Android devices.....Windows Phone 7 has yet to see any real traction and I think it's just too far behind to catch up.
iOS is the only real competitor and with Steve Jobs taking leave of absence for an unspecified amount of time, Apple will definitely suffer.
With Larry Page as the new CEO, development at Google will speed up too. His track record speaks for itself.