All I know is, I bought my cellphone primarily to function as a telephone. Then, the first "smartphones" came out, and I realized one of them would prevent me from needing to carry a separate "personal organizer" around. Next, I saw the attractiveness of having one serve double-duty as my portable MP3 music player, so I wasn't carrying around a separate iPod or other such player, too. By that time, most phones were offering a promise of being a good email reader, web browser, portable game machine, and camera too.
Most of them were "Jacks of all trades, masters of none" though, in practice. (My Palm Treos crashed constantly, and never could browse a web site worth a darn. And when I went to a Razr, I got a few good games on it but a terrible contact manager - and only minimal usefulness for mail or web related use. It got great phone reception, though, which was a big plus.)
The iPhone? Another "Jack of all trades", but at least it's a "master of SOME". Having iPod brains/guts rolled into it, I think it masters that task. It soundly beats the competition at web browsing too. Ability to access my work's Exchange mail server (without them buying costly "Enterprise connector" software like Blackberry needs) is a big plus too.
Yeah, it doesn't record video or do any "cut and paste".... but I'm left thinking "So what?!" to all of that. Those are all things they COULD add with another firmware update, for starters. But even if Apple never does, they've put together a phone that beats anything I carried in my pocket before - and for that, I'm a happy customer. I think many others share my opinion.