LOL. For really cheap phones every cent matters. An Android phone needs what? 256mb RAM and 512 mb of storage and a 600mhz SOC?
If Mozilla can push these specs down to something like 128 mb RAM, 256 mb of storage and a 400 Mhz SOC it might really have a winner.
I don't believe your 1Ghz, 1GB claim for one second. SOC and RAM prices matter a lot otherwise MS wouldn't have crippled Windows Mobile Phone 7.5 Series Second Enterprise Edition to be able to run on 256mb devices.
Android devices might reach $70 next year (like Eric Schmidt said), but going lower than that is really important for the third world.
A simpler SOC and less storage means lower battery requirement which also lowers the cost. If you build millions and millions of these things every cent matters, no doubt about it.