What I would say in brief about the iPhone is this: believe the hype. It works seemlessly, it's achingly gorgeous to look at and performs excellently. The GPS is actually very useful and has saved me a few times from getting lost.
But it isn't perfect by any means.
The battery life is not great. It's obviously full of clever (and energy-sapping) features like 3G and GPS, but with even relatively limited use you'll be charging this on average every one and a half days. You can turn down the brightness and do other things to conserve power, but they only have a limited effect. This also means that all those lovely applications you can download only have limited play life before your battery starts to drain. Having said that, it does perform well when it comes to making and receiving actual calls, which is really the point of the iPhone.
UPDATE 26/9/08: Firmware 2.1 has significantly enhanced battery life.
The camera function is severely limited. It's 2 megapixels, but there is no digital zoom, no light/flash and no video recording. There is also no sound recording.
You can't save draft text messages, or forward a pre-existing message to someone else. Nor can you copy and paste so if you want to forward a message you have to retype it.
You can't send or receive MMSs. To send a pic you have to email it; to receive a pic you have to log onto your 02.co.uk account and access it there. Messy.
If you're happy with this then great. I'm over the moon with mine but there are higher spec devices out there. What they don't do, which the iPhone excels at, is pulling it all together into an incredibly attractive and intuitive device.