First and foremost, put yourself in HP's shoes. If you really were planning on keeping up with the Smart Phone market, would you want to tell anyone? I'd be lying through my teeth saying "no, no phones for us.... BAM iPhone killer".
HP and Apple don't really compete at all as it stands now. With the introduction of tablet PCs, they will be competing in one vertical. HP will likely pursue practicality, while Apple continues on it's usually "shiny but useless" path for the Jersey Shore/MTV crowd. Why not open up two fronts on Apple at the same time? If the iPhone and iPad are so similar, why would a webOS tablet not work just as well as a webOS phone? HP could use the exact same model as Apple (sharing OSes, apps, etc) and just do it better than Apple.
The wildcard then becomes Android tablets/phones and Google's response. We really don't need webOS AND Android. The apps will need to be crossplatform, or one will have to die off. I can't see HP or Google backing down, so it will become a war of who can throw money at it the longest until Microsoft gets their s*** together with a tablet OS and standardizes the industry.