Even though gouranga is being downvoted for saying the same thing I'm about to, it bears repeating. Specs matter in the Android world. The faster the phone, the better your experience. This is a tradeoff of an open, general purpose mobile OS. In iOS and Windows Phone, the software is catered directly to the hardware. Faster hardware does not mean you're going to ever notice an increase in speed inside the OS.
So when people say "yes, but can it match my dual core, 1.5Ghz, whatever else flagship Android phone?", the answer is simply "it doesn't matter". That's not a cop-out, that's not a defense, that's the truth. Windows Phone and iOS are built for their hardware and always run at a constant speed. It doesn't have bleeding edge hardware, but it doesn't need it in order to run as fast as a flagship Android phone.
Sorry, I was assuming gouranga was asking a genuine question. The question he was asking why these phones cost so much, while the Lumia 710 costs so little. And the reality is that the Lumias are running on hardware that time forgot, and better components cost more money. It's going to be cheaper to build a thick phone with a small battery, a slow processor, little ram and a small low resolution screen than it is to build something more modern. That's just the way things are, not a value judgement or a claim that everyone should have the latest and greatest phone.
So why does that 710 use low-end components? One reason is that it's positioned as low or mid-range device, competing against other cheap phones built from cheap components. Another is that there's not much wiggle-room in the WP7 hardware specs. You're going to have a screen of a certain resolution, a certain amount of RAM, a certain kind of Qualcomm SOC, etc.
Luckily for Nokia, in this case these reasons are well aligned. Unfortunately for them they're also forced to try to sell pretty much the same hardware in a different case as their flagship devices. (There are minor spec differences like the amount of flash or the exact technology used for the screen).
And yes, there are real benefits to the higher specs. For CPU perhaps not so much, but the quality of a screen is a huge selling point. A thinner phone is both a good selling point, and much more convenient to carry around. Extra RAM is always useful - on many mobile devices browsing is really frustrating compared to a desktop partly due to how little data can be cached. A better GPU can be a big deal when it comes to games (certainly Apple has managed to do well there). A phone with better specs is going to have a smoother upgrade path to newer versions of the OS.
And I don't see why WP7 phones would be exempt from this. For example, I find it hard to believe anyone could argue that at least some WP7 devices would not be much better with a higher resolution screen than the one mandated by MS. And of course the people buying a Lumia 900 now are going to be really pissed off when they can't upgrade to WP8 next fall due to being sold devices using a 2 year old spec.
I can't think of much more that they would need to implement that their competitors are remotely close to having. They have multitasking, they have video, games, music, GPS, HTML5, maps, HD recording, forward facing cameras, Skype, etc.
It sounds like you're saying Android has something special that needs more hardware, which isn't true. The _base system_ needs faster hardware, because it's general purpose. An Xbox can run faster than Windows on the same hardware because it's designed for just one implementation.
