Sprint brought the EVO in this spring, denying Google to carry the device in stores: http://gizmodo.com/5535436/sprint-wont-sell-the-nexus-one

Like you mentioned, they had no local exposure, but I think it was largely due to carriers not giving them the support. It was like the big guys wanted to show Google who really runs the industry, so they blocked the phone and forced the Nexus to fail. RIP

But I think the N1 was always intended to be a developer phone first and a consumer phone second. They needed a gold standard for developers and a platform to launch the latest and greatest updates on. I think Google didn’t want to put up with manufacturers dragging their feet over updating to the latest version of android. How much press would Froyo get if they released it and no one could use it? It is getting a ton of buzz despite that only 3% of android users can even access it (without using custom roms). I think they would have sold as many phones as there was demand, but I agree that it wasn’t their primary objective.

The phone will remain the best android phone until the next google release, not because of the hardware but because it is google’s platform for releasing updates. Hopefully they will be a bit picker about the hardware when they are picking their next favorite child. I love my N1, but it can be downright fickle about it’s 3g connection and google has admitted that fixing it is not their priority.