Theres only bang for buck with iphone 5 if you dont need any more than a 16gb version. If you need anymore then its a total rip off compared to the note 2. You need more on the note 2 then you just chuck a cheap fast 64gb micro sd card in making it an 80gb phone if you got the 16gb version. Youre talking £200 more if you want the 64gb iphone 5 over the 16gb.
Back on topic the note 2 is the best bang for buck. You can do everything on it. Way more than an iphone even an ipad.
Android app market isn't close, its one of the main reasons I don't switch. Way too many apps I'd either be downgrading in quality or flat out dropping. The Note 2 does have a huge screen though, which is a plus in and of itself.
You're right about SD cards being cheap, which is also great for the Note 2, but as its been pointed out the very high resale value of iPhones does a great deal to offset the initial cost, even with fixed memory.