If releasing a mobile app for iPhone and Android in the next two to four months, is it better to develop in HTML5, or develop native apps?

It depends on what you really want to do - if you would like to utilize some native calls or libraries and have an experience that is extremely tight and seamless I would recommend that you focus on building the app native first. Most mobile apps, at-least the ones that are built to optimize the user-experience should have a multi-layered experience... A shallow user-experience also needs to provide enough of a punch so that users feel that the initial experience with the app is positive. To make this shallow experience seem spiffy and efficient you will have to use native libraries and cache data heavily after app-launch or pre-load data before launch. Allowing the use of embedded UIWebViews which render html5 is a good strategy but I would suggest using this when you want to add depth to your app and standardize across platforms (if you need to). Android's support for html5 and CSS3 is petty good already and with Android 2.4 the remaining kinks are going to be solved to allow the same level of support as Safari on iOS, most of these issues currently seem to be with video and audio codecs which I have no doubt will be sorted.

Short answer: develop native apps. Long answer: If your core product is a mobile app or your main business is developing software, I personally think developing html5 apps is committing suicide. I can't find any valid reasons developing non-native apps. You'll come across some myths about developing non-native apps. Such as it's faster to develop. No it's really not. You'll have to spend a huge amount of time trying to build a fancy app running fine on Android Browser (yes Android Browser, Android still doesn't have Chrome integrated in it) and Safari on iOS. And this is more annoying than you think considering the fact that there are also many users using different os versions. The worst part is you may end up with an app with serious performance issues. I don't even mention how user unfriendly it is using the same interface for Android and iOS.

Netflix's entire mobile portfolio is a single HTML5 web-app that runs on Android and iOS. http://techblog.netflix.com/2010/12/html5-and-video-streaming.html While this approach works for a large company like Netflix, startups have the advantage of being nimble and delivering rich products. Developing natively allows you to add that pizazz many big companies fail to offer. Differentiate yourself by offering a native experience. There is a clear distinction between a mobile web app and a native app.

A mixed approach is also possible, especially for geo-location applications. You can build a native "frame" which shows some HTML5 content downloaded from the server. The frame is responsible for obtaining the location and passing it to the frame, operating in background, auto-start. A special support for such applications has been introduced in Android 2.3 (http://developer.android.com/guide/webapps/index.html)

It really depends. Some apps are really only viable if they are native, but for most apps, HTML5 would probably be fine. I think we'll start to see more and more HTML5 apps in the future. And more widespread support, especially on the iPhone. But, like I said, not everything can be done in HTML5 yet. For example, Burbn was HTML5 (the geo-location app that came before instagram) but Instagram is native because it needs to be to handle pictures.

I answered this question with some discussion here: It feels like this question gets asked on a daily basis

Native apps are generally preferred by consumers, so native is always "better". The question is whether you can afford to develop native apps for every platform you care about.

It depends on the content of your app. If you wish to use the hardware, such as the GPS, Accelerometer, Multi-Touch and so on, it's best to create native app for the best performance or data result. On the other hand, the HTML5+CSS3 will speed up the UI format for the rss feed reader or tweet content display. The HTML5+CSS3 is fully supported on the iOS but not on Android OS yet.

My preference is for native apps.  Less contact with a server and you can harness the power of the device.  I would see a hybrid app as one that generates HTML 5 but does as little contact to a server as possible. There is more coding involved, but it would be better experience for the user.