If no-one else tries to better it then much of Apples incentive to improve it would disappear.
I would not want Apple to be "the only game in town" any more than I`d want Microsoft/Google/HTC/RIM/whoever to be.
Competition is healthy.
Apple tends to stick to its guns regardless of what the competition is doing. They do strive to provide innovation at each iteration of a device but sometimes its not the innovation that some seek. Look at Blu-Ray, for example. Everyone and their mother offers it as standard or an option but Apple's never been interested. So competition or not Apple will continue to put out better product but don't expect them to match features to their competitors' products.