for me it's not so much any one feature but rather the way email, texts, ipod, web are all available in my pocket in an aethetically pleasing package that is a joy to use.
The iPhone has replaced a 30 gig (gave it to my father) and an 8 gig nano.
When I go out, I can hook up my phone to my Alpine head unit and get all my music with me while still having all my communications needs at my fingertips.