The fact that you're comparing a bug-fixing 10.5.x OS update with the iPhone 2.0 OS shows that your sense of logic and reality is out of whack.
How many new, bonafide features did 10.5.3 add over 10.5.2 or 10.5.1 or 10.5? How many? Count em for me!
Now, look at iPhone 2.0, and tell me how many new, bona-fide features have been added? The answer is A TON.
The fact that Apple makes that available for FREE to all iPhone users (not just 3G users) doesn't change the fact that it required a huge investment in time and dollars, and it also doesn't change the fact that the iPhone 3G hardware enjoys many benefits from that work (which sets it apart from other 3G phones out there)
Your problem (shared by others in this thread) is that you don't have a grasp of the concept of "limited resources" and the need to pick and choose your battles. Sure, Apple could have spent its time and money coding MMS and Copy and Paste and adding a higher resolution camera. But given a year's development time, that would mean something else would have to go: 3G, or hardware GPS, or best-of-breed 3G battery life, or the new low price, or Enterprise functionality, or the iPhone dev kit and the App store (which is going to bring HUGE benefits in even the short term), or the ability to do live over-the-air synching with .Mac accounts (Mobile Me), etc. etc.
My problem with this thread is that a number of people are whining about their personal preferences not being implemented, and saying "This is hardly an upgrade at all!". That's what offends me, because this is a HUGE upgrade. It's a record-breaking upgrade (name another mobile device that has added so many new features in only a year, and given them away for free? Can you even name one?!).
I'm fine with people expressing personal disappointment that their pet little feature (like MMS--the vast majority of cel phone users never use it!) isn't implemented, but don't try to write-off everything that Apple HAS delivered. Have the common sense and the sense of fairness to acknowledge it, because what Apple has delivered recently *IS* very significant.
Finally, I think some of you need to take a step back and compare the iPhone 3G to real-world alternatives out there...not to your fantasy dream phone, but to other phones on the market. The iPhone 3G has:
* 3G speeds (with, apparently, very impressive battery life)
* Built in WiFi
* Hardware GPS
* Game-changing multi-touch interface
* Huge 3.5" screen (which is far better for watching video or looking at photos than virtually any competitor on the market)
* Thoughtful Apple software and hardware design in terms of usability (isn't easy to measure on a spec sheet, but we all know it adds value)
* Very easy syncing of media to and from your computer (video, music, photos)
* 2MP camera
* Ability to sample and buy songs directly from the world's biggest and most popular online music store, with a couple easy clicks
* Ability to transfer and watch major TV shows, care of Apple store (how easy is that to do on a Blackberry? A Palm? A Nokia?)
* Ability to RENT and then download and watch major commercial movies starting at 99 cents (again, what other cel phone can do that?
* Superior development environment, and huge, enthusiastic developer community (which, I'm betting, will quickly out-pace anything seen on Windows Mobile, Blackberry, Palm, and Nokia platforms)
* Built in Application store, which allows you to buy and install apps with a couple easy clicks, directly from your phone
* Full (or nearly full) Enterprise functionality
* Instantaneous over-the-air syncing of personal data (contacts, schedule, photos, etc) to your other computers via MobileMe (if you subscribe
* Only $199 for 8 gigs and $299 for 16 gigs.
So tell me, what real-world phones offer these kind of features, for that kind of price? A Nokia N95? Some Samsung flavor of the month? The new 3G Blackberry? How do these compare to what Apple is offering in the iPhone? And if we're talking about 3G phones, will those competitors also have to subscribe to a $30 3G plan from AT&T, or a more expensive plan from Verizon or Sprint?
The fact is, Apple is offering an AMAZING product in the iPhone, at an incredible value. I think many of you have forgotten that.