Why do you mention iPhones? This has NOTHING to do with Apple or even telephony, it's a serious effort to produce a tablet for Indian students which they hope to be able to offer at a subsidised price.
The project has different requirements so maybe this was why you drew the apple / oranges comparison. The OLPC has far more design to cope with the environments they will be working in which has unfortunately upped the price. They use discrete components over surface mount to ensure serviceability in the field for example.
I can see the £10 tablet in the next few years. I just got a basic Android mobile for under £100 (non contract) which I know darn well could do most of what I needed in my student days and then some. Whilst yet to try I can root it and run Debian on it, pair it with a Bluetooth KB and have a mini PC for very little expenditure.