First of all, I wildly underestimated the iPhone. It is unique and nothing else comes close. The ease of use and elegance is difficult to overstate.
Second, I am hoping that all iPods adopt this style: embedded macosx, wifi support and the large screen should be standard features. And thank the powers that be for flash memory: my iPod video hard drive lasted just long enough to go out of warranty.
Third, the Internet integration is just brilliant. I read the Wall Street Journal quite a bit on my Treo while traveling, and the experience on the iPhone is actually better than it is on my laptop computer. I feel like I'm reading the paper when I rotate the iPhone sideways and use the mobile content feed.
Fourth, the adaptive keyboard is also brilliant. It is not, however, a replacement for a real keyboard and from my limited experience, works better with the finger tips than the thumbs.
Fifth, the YouTube integration is horrible. Search is awful. At least let users comment back on videos. Not a big disappointment, but surprising.
Lastly, there is a lot missing. Top two items on my list: as far as I can tell, you can't do a bluetooth synch with a Mac laptop; no GPS. Means there will be plenty of room to grow features (and maintain margins) over the next year.
Slightly imperfect, this device puts the market to shame. I am disgusted every time I turn on my Treo now.