It's not so much as a failure as a huge De-Evolution in many of it's parts. First the fact that the OS has not been significantly changed much since it's release is the worst. Competition from Android, the very elegant Windows platform upcoming, possibly even BB make it a very confusing question why they haven't. Of course the answer is simple, millions of consumers still purchase iOS so you cannot blame them from a business point of view, still it's infuriating to not have very basic obvious things a smartphone should have.
Add to that what they did with Maps, although I can't say I wholly blame them after reading their rationale (if true) that Google did not want to give them turn by turn and also wanted to increase its presence on google maps. It was a good business decision, what was the bad decision was to release it when it wasn't ready, they should have held it back, especially since they had another year on their contract with Google.
The other aspect that is a De-Evolution is some of the questionable UI decisions. We are all familiar with Apple wanting things like Calendar to look like an old spiral bound calendar, etc. But they are just doing too many UI changes which are actually taking away functionality. Things like the new phone dialer being bright white, the find you iphone app being heavily letterboxed so you can't see much of the map, etc etc. I just don't know what some of these guys are thinking.
The iphone 5, meh. If it was my first smartphone I'd be thrilled, but it doesn't do anything my iphone 4s doesn't do, and I like my glass enclosure better. But as a piece of hardware it's pretty nice, it just always amazes me that like a vapid blonde the software doesn't match up, especially with iOS6.