it's not that the iPhone display is washed out, it's more like the AMOLED display of the Nexus One over-saturates the colors to the extent that it will burn your eyeballs out. Color reproduction on N1 and HTC Desire AMOLED screens is the biggest flaw of those devices, besides the stupid PenTile Matrix Display problem.i just did a screen comparison of my n1 next to my managers new iphone for, on identical pictures the color on the n1 is LEAPS and BOUNDS above the iphone. I will admit that the pixel density on the iphones screen is really really good, but the color reproduction? totally washed out.
AMOLED displays have amazzzzzzing color and contrast, u would think a multimedia focused device, such as an iphone would have taken that into consideration.
Want to see how those colors are MEANT to look like, then check out the Motorola Droid display or the iPhone 4 display. Both displays have been scientifically proved to be far superior in color reproduction and pixel density to the really bad AMOLED on N1.