Before the iPhone was shown off in 2007, Android was being built for devices that looked like BlackBerries, complete with the little trackball.
The first consumer Android devices came in 2008, looking a lot more like the iPhone than the BlackBerry-esque prototypes, but they kept the trackball because much of the software was still more suited for navigation with that than with the touchscreen.
I'm thinking rather of competitors the name of which I forgot, that came out at the same time or slightly before the iPhone, that had the new capacitive touchscreen tech (and used it for a full sized screen with a simulated keyboard), but little else in terms of "support" needed for a successful phone.
The first consumer Android devices came in 2008, looking a lot more like the iPhone than the BlackBerry-esque prototypes, but they kept the trackball because much of the software was still more suited for navigation with that than with the touchscreen.