How is fragmentation a issue? I've never gotten that part, though I hear people talk about it all the time.
It's a massive issue, even the Galaxy Nexus was badly fragmented (hence why Google decided to take full control with the Nexus 4, best decision they could of made). I'd dare say the Galaxy Nexus was Google's biggest (recent) blunder, allowing carriers to have a say on the updates AND then dumping those carrier locked handsets on Samsung to deal with (who didn't care because they had their own handsets to worry about). Google got burnt big time on that one. Then as previously mentioned you got a myriad of different carrier/OEM ROMs (often for the same handset) out there. A perfect example of that is the Samsung Galaxy S2, in the US alone there were a ridiculous amount of variations of that handset (one for each carrier) running different versions of Android and different customisations.
I'm a strong believer that Google should follow MS (with Windows Phone) and take control over OS updates to ensure all handsets (that are capable) are updated to the latest version of Android. I don't mean just for the sake of it, apart from the new features and tweaks, there are also security fixes that all compatible handsets should be getting. That alone should help reduce the malware problem.