There are quite a few factors that go into the iPod Touch/iPhone having superior games at this point in time, some of which I'm a little surprised haven't been brought up.
First is Apple's ridiculous App Store process, which despite being seemingly nonsensical at times probably still weeds out some of the bad games from the market.
Second is the fact that hardware for the iPhone/Touch is very specific. Sure, there are multiple generations of them, but being able to develop applications when you know (and can test on) exactly what your customers are using gives you a huge advantage. Look at how good xbox 360 games look at 1080p. They can compete with modern PC games in many cases, and the system isn't new by any means in hardware terms. Developers know how to get every bit of power from these systems because they don't have to account for different hardware, different running processes, etc. On a more open system you just can't test everything.
Third is, well, the iPod Touch in general. Devs can make games for an mp3 player (and don't forget that the iPod Touch is more or less just an mp3 player to many parents, with games thrown in to occupy their kids on long car rides, etc) that parents will buy their kids well before these kids have any cell phones, much less a smartphone. Put simply, the market for games on Apple's mobile OS is much larger than the Android market, so devs stand to earn more money. As of right now, Android is pretty much just a smartphone OS, with some expansions into tablets and netbooks, both of which are gadgety and not on the mass-market scale of an mp3 player.
Given time, Android will have more games with more polish to them. Unless something changes in the consumer electronics space, however, I wouldn't be surprised to see Apple keep the lead indefinitely.