That would be perfect for my toddler. He sits on my lap and plays with Uzu (an app) but can't resist the home button. There seems to be many people asking in forums for cases that solve the same problem by obscuring the button. It could be great for a kiosk mode too, especially if the gestures to get out of the app could be a chosen secret.
However, as a phone I don't see how less than a back button and a home button is sufficient. It's a lot like the mouse debate. I need at least a couple hardware buttons.
Lots of iPhone users are quite productive with just a home button and no back button. Not to say that it's definitively better that way (I think I prefer it, though I haven't spent nearly as much time with an Android device), but it's certainly not so much worse as to cause an outcry for it.
I use an iPhone daily, and have only played with friends Androids, but the Android back hard key doesn't work as well for me. I think it's asymmetric position works worse for people whose thumb is on the other side of the device (if they're a lefty). No such issue with iPhones home button; there's no wrong option.
