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Bringing up the cost of platform builder is a moot point. If you make or break business decisions for a PDA line based on a $3000 investment then you should get out of the business. $3000 is a drop in the tank.
There is confusion about 'Linux being free' and 'Linux development being free'. Development time and cost of resources is where the real cost is. And you are not going to get Linux developers to code your base platform and do integration with hardware gratis.
As for cost of Linux for embedded platforms, its not free either. Usually you source a base system from a commercial entity selling a customized Linux distro for embedded use. This costs $$$.
Anyone who complains they can hack such a system together in their backyard since all the GNU tools are free are living in a dream world and should stick to slashdot.
As for all the arguments about Linux being confusing - moot point! Its all up to the interface you put on it.
Linux isn't used on mobile phones because the big few (Nokia, etc.) get revenue from selling their platform development kits. Vendor lock-in = profits.
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