NAND is just a fancy word for flash memory... In a sense. See
this Wikipedia article if you want to know more.
Yes, it would mean we could flash Android to our phones like any other ROM. It's a little ways off, but hopefully not far.
2.1 vs. 2.0.1... there's some differences, mostly under the hood. You can run 2.0.1 without a whole lot of noticeable differences. Can't think of all of 'em off the top of my head tho.