I think Nokia has a long term plan rather than a short term. Everyone is jumping on the Android bandwagon, but Nokia is working on MeeGo which is their answer to Android. Maemo though is pretty darn good, I own an iPhone and an N900, since I got the N900 I haven't even bothered to charge the iPhone (the N900 is that good).
The problem (I believe) is that Nokia never really penetrated the US market place, they were huge everywhere else but Americans preferred American phones (go figure) so they naturally prefer the iPhone and any other US based device, Nokia was always fighting a losing battle on that front, the yanks just don't get it, Nokia phones are better than Apple phones, but the yanks would rather have an inferior phone than an European one.
Will Nokia manage to fight back with a killer phone? I don't know. They can't compete with Android, no one can, Android is in a class of it's own with anyone and their mother being able to release an Android phone with a huge ecosystem. It can however bring out incredible high end mobile phones, and if MeeGo is a success (which I hope it is) they may just do that.
Should Nokia be worried? Not really, they produced a mobile which is the most bought electronic device on the planet, ever, selling more of that model than Apple sold iPods.
I would however get someone to address Ovi, it's pants, and Nokia Maps takes too long to load on the N900 compared to Google Maps on the iPhone, apps wise, Maemo is Linux, just compile it in scratchbox and hope, but the N900 is more a geek device than a phone, but damn it's a gorgeous bit of kit.
Me though, I'd bring out a version 2 of the N900 with capacitive rather than resistive, I'd bring out a new version of QT designed specifically for mobile development, add .NET (mono) to Maemo native so people can hack in C#, I'd make minor tweaks, but yeah, the N900 just ticks every box, including the "blinds niece when she takes a photo of herself and the flash blinds her" box.