one of the main selling points to the smart phone iphone, but the media player market is what apple needs to prioritize as its still half there income, and a LOT of ipod customers are teens, teens that cannot get contracts, a lot of people like the iphone but say i dont need the internet all the time but they do like to have a media player and a phone in one. Im not saying theyd loose the internet off of the main iphone.
One doesn't need a contract or extra money to get on the internet - just a free hot spot. If there is support for VOIP one day (which I hope there will be) then one could make their calls free as well. I think being able to access the internet with great portability ultimately will be more important than using a phone with a contractual and limited service provider.