Why is fragmentation a bad thing? I mean, there are quite a lot of people who see the 770 not as a webpad, but as a portable Linux workstation; I'm reasonably certain quite a few of them would appreciate a more "generic" Linux, but don't want to dish out the dosh for a Pepper Pad 3. And I'm fairly convinced that a non-trivial subsection of those would be interested in a non-graphical distro for their 770.
Don't forget that we already have fragmentation: There are several versions of the kernel available and there is the mutual incompatibility of ITOS2005 vs ITOS2006. One might say that in that last case Nokia started the fork themselves. Worse: Porting apps from 2005 to 2006 was so non-trivial that many of them are still not done.