I think simplicity isn't the only story, it's usable simplicity. If simple was the only game in town, Apple would only need the iPod shuffle and something like John's Phone (http://johnsphones.org/) to rule the world.
The iPod and iPhone has added lots and lots of functionality over the years, yet the interface has stayed simple. It's possible to add lots of new features in ways that doesn't make the interface more complex, however it's a big challenge.
You can add new features without adding interface complexity, but its harder to differential products if the user do not have any visible difference between ones old product now going for 15$, the competitors new 30-99$ products, and ones own new product going for 100$. Abstract arguments like "its faster!, more feature than before!" is much harder sell when the two devices look and feel the same.
One way is to sue all competitors and have the only store available presenting exclusive the new product, but that only goes so far.
As for the johnsphones, it has buttons. As interface goes, it still look complex compared to a smartphone. The most simplistic phone design is one with only one or zero buttons, like the Third generation iPod Shuffle if it had been a phone.
The iPod and iPhone has added lots and lots of functionality over the years, yet the interface has stayed simple. It's possible to add lots of new features in ways that doesn't make the interface more complex, however it's a big challenge.