They have released such devices -- the current model is called N97. I'd bet they go to OMAP3 (and hence 800x480) in their next N97-like release, just as the next Internet Tablet will, but I think the lower resolution was necessary to avoid the separate-controller compromises in the N8x0 (i.e., to get good framerate and TV-out). Why shouldn't they do both, as originally planned -- continue with their S60 devices for mainstream sales, and also continue the tablets as a development program for the next generation of mainstream devices? Canning development of future products is not usually considered the way to stay ahead of competition...

And I don't see devices releases around the time of the N810 beating the N810; I don't see devices out now or known to be released soon that beat the RX-51. So while I can see "see other manufacturers have (just about) caught up to it", I can't see that they "may be getting ready to pass." Since this market is not dominated by yearly releases like, say, the car industry, it's no surprise that other manufacturers releasing between Nokia's releases would catch up; unless they can pull clearly ahead for some time before Nokia's next release, though, they're not much threat (in this sector). I haven't seen a single competitor with a clearly advanced product.

If those people think all Nokia makes are tablets, and are unaware of the phone lineup, they have the exact opposite of the typical ignorance I see. I think this particular sort of underinformed consumer is rare enough to be neglected.