I also take a minimal approach to applications. I am sure we have all been through the "new to android" phase where we install everything under the sun. But as of late I have been using about 5 applications, heck. Most apps I see on the market are useless and you can do the same things from the browser or the terminal.
Velocity 1.1 is solid and quick. 1.2 will have not many performance boosts ( I think we have already implemented all we can ) most of the changes will be cosmetic and with the framework. We do not have a release date in mind.
The downside to having a cheap/free smartphone is it is slow, plain and simple. No matter what we do phones like the Incredible will ALWAYS run circles around our little Ally. There is after all, only so much you can do with software.