Correct, Google bought Android in 2005 but went back to the drawing board in 2007 when iPhone came out. Now Google has a chance to take some time and try some new things out.
They didn't totally go back to the drawing board. Comparing with the original demo they mainly just added touch stuff. The first android phones still had the same blackberry-esque selection ball even though they also had added capacitive touch.
I believe after rage from Jobs they left out multitouch zooming at first and did something double tap based, even though MS had done it before Apple (without capacitive) and Minority Report has shown it.
If you look at both devices you'll notice that Android essentially looked and operated the same. The only changes were to add additional support for touch screen devices such as the virtual keyboard. I would hardly call this going back to the drawing board. There was no need as they already had all of the software pieces in place.
I believe after rage from Jobs they left out multitouch zooming at first and did something double tap based, even though MS had done it before Apple (without capacitive) and Minority Report has shown it.