Problem is, once you have redesigned the entire UI of a "fully functional OS" (aka a desktop OS) to be touch friendly, you still end up launching normal apps that aren't designed for touch. By presenting a "new" OS to developers, you force the apps to also be touch friendly right up front, instead of having them cludge together something on top of their existing application.

For Apple, going with the stripped down iPhone OS allowed them to use an ARM processor and hit 10 hours of battery life. This also ensured developers can't just bring over their desktop apps built around a mouse interface. This may be the right way to go in the end, as Microsoft already spent the past decade trying to get their desktop OS into tablets and UMPCs. It didn't work out well for them.

The only complaint I can see against the iPad OS method at this point is lack of 3rd party multitasking. It's a big gap Apple is going to have to address soon, since push notifications don't allow me to listen to Pandora while working on something else.