Just to add a 2p to this, iPhone has a lot of flaws (really crap camera, a habit of randomly deciding it won't fucking talk to iPhoto to download the crappy photos taken with the crappy camera), but its UI and app store piss all over the competition from a great height. iPhone is a fairly average mobile phone, but a really great almost everything else—mobile email client (not as good as BB, but damn close), web browsing device, casual gaming unit, eBook reader (see
Stanza and
Classics, utilities unit, etc.) In fact, when I was away over NYE 2008, I used my laptop exactly no times at all—I just used my iPhone to browse the web, deal with emails and other things (like playing as many games of Wurlde as humanely possible in spare moments of time).
Having seen a good chunk of the competition, I can't really imagine using anything else now. Also, O2's plans in the UK, while not cheap, are good compared to every other iPhone plan worldwide, and the data stuff on the PAG version is surprisingly decent.
On other factors:
iTunes: just deal with it, or compromise the hardware you buy. iTunes really isn't that bad. Yeah, it needs QuickTime (oh noes!), but if you really hate iTunes, just use it for iPhone stuff and use some other app for everything else.
MMS: this one really staggers me in terms of complaints. But then that's down to me receiving precisely one MMS ever, and that was a link that I had to manually type into a browser to receive my crappy little image. I think Apple's got this bang on, like it did with the floppy disk, but it's a bit ahead of the curve. Don't expect Apple to cave on this on, though—if you have to have MMS and can't bear the thought of emailing your images instead, iPhone isn't the device for you.
iClones like
https://www.specialphones.eu/en/store/10285 : uh, seriously? You'd be utterly insane to buy something like that. Those I've seen have appalling response times, broken software, and only superficially resemble iPhone anyway (like quite a few large competitors when they got all scared and started adding borked touchscreen components). The most important parts of iPhone are the app store and the way the device works. iClones take both things away, leaving you with less than a shadow of the original product.
Google Jesus phone: looks good. However, unlike Apple's draconian WE WILL CONTROL EVERYTHING attitude, Google's stance is more "hey, the open-source community will fill the holes". And there are some pretty damn huge holes right now. In a year or so, Google's device is going to be a major player (perhaps
the major player), battling everyone else for marketshare. Right now, I don't think it's the best option.
New Palm iPhone killer: bwahahahaha!