Samsung Galaxy S
For testing Android apps on a small screen, my employer bought me a used Samsung Galaxy S Android phone from the Gazelle eBay store. $210. It has Android 2.2.1 (Froyo). Very responsive. I could live with it, though I'd buy the Galaxy S II if I were getting a new Android phone. I have no SIM for the phone, so it's strictly for software testing (and I get no T-Mobile reception at my house). I still slightly prefer my iPhone 4, but it's very close. I can see why Apple is so afraid of Samsung.
Here it is on top of my Kindle Fire, plugged in to the iMac for development.