The UI on this thing kills everything else, including the various Windows Mobile iterations. Not just the touchscreen, but the way the GUI takes advantage of the touchscreen, as well as the motion sensor and proximity detector.
Since such touchscreen products have already been available in Windows phones for awhile, it blows my mind that they're not even close.
The interface is also key to the way everything is integrated- Google, contacts, phone, photos, blah blah blah...THIS is what a smartphone is supposed to be like.
Pricing is a bit ahead of the curve right now, but wait until next year when memory prices are cheaper. Apple doesn't drop prices a lot, but if you look at the iPod, you will see that cost improvements are passed onto consumers.
This is the next big thing for Apple, and has a chance to be right up there with the Mac and the iPod.
What I'm wondering is what kind of additional apps will be possible. Widgets are obvious, and actually will be much cooler on the iPhone than on Macs. I like the square icons, there should be some way of organzing additional apps/widgets though.