This is really a poor decision. Part of the allure of a smartphone is that it's a PDA as well. This means 3rd party programs. I use my PocketPC all the time, and rely mainly on 3rd party apps.
I understand Steve's reasoning, in that he wants a smooth, seemless device. This is somewhat analogous to Mac's being so stable because Apple controls the hardware and software, so OS X is programmed with every possible circumstance in mind, unlike Windows which must cope with a myriad of hardware situations (I know we're only talking about software with the iPhone though). Still, I agree with a previous poster who said it's Apple's responsibility to ensure the smooth operation of the phone portion of the device, regardless of 3rd party apps.
However disappointed I am by this decision, I think we need to realize this is Apple's first go at this device (and market), so they're being overly cautious. They want to make a good first impression on the majority of consumers, and that means making a simple, efficient, and reliable device. We might see changes once Apple gets a firm foothold in this market.
