Whilst I agree that the iPhone is a good product, but it is nowhere as 'innovative' as people here are pointing it out to be.
I have a Nokia E50 that cost me around $200. It has Symbian 9.1(3rd edition) as its OS.
The first thing that I didn't like about the iPhone was that it won't support third party apps. I have a lot of respect for Steve Jobs, but the whole thing about networks going down because of third party applications is BS. Plain and simple BS.
My $200 phone supports third party applications. I can install Google Maps, Yahoo GO, Yahoo Messenger and MSN Messenger. Heck there are multi-IM messengers for the platform.
There is an application called Fring. I can use the VOIP and IM functionality of Skype AND Google Talk right on my phone. For free. Heck, even OS 10.4.8 on my Mac Mini doesn't have a single app that supports the VOIP functionality of Google Talk.
The mp3 player on my Symbian phone supports AAC, WMA and MP3 songs. I can install a small app to get OGG support.
Videos? I use SmartMovie and DivX that allow me to play 320x240 videos both in landscape and portrait modes. mp4, dix, xvid. The inbuilt realplayer is good too.
Before someone tells me about Safari on iPhone, I'd like to point out that Webkit is pre-installed on my Symbian phone. RSS feeds, AJAX support, multi-window support, Flash support right on the phone. Yes, it renders full pages.
http://s60.com/business/productinfo/applicationsandtechnologies/webrowser/techinfo
If that wasn't enough, Opera is coming out with v9 of its web browser for Symbian. V8.65 is very good, v9 will be better.
I can edit PDF, DOC, XLS files using Quickoffice and OfficeSuite.
As for security and the whole 'network going down' thing, on v9.x symbian phones, applications require a developer certificate to install on your phone. This certificate is provided by Nokia(correct me if I am wrong). You can also get your own certificate, but that will work only on your phone(You have to enter your phone's IMEI no. while getting it signed).
As for the UI, iPhone will have the best UI of all phones. However, Nokia's UI, especially that of its new 9.1 phones is very very good. I have installed a couple of themes, and it looks even better.
Here are some screenshots(Forgive me for using the Vista theme

. Vista sucks, but this theme looks really cool on the phone)
The thing that really interests me about the iPhone is its touchscreen functionality. THat is a brilliant innovation

The Apple team has again showed that they can do what no one else can do. However, expect for the design and the UI, I do not think that the iPhone is worth paying $499 for. I got a 1 GB kingston card for Rs. 650($10-12).