"The iPhone IS a telephony hardware device and service (with the appropriate $600 US price) that uses WiFi, but is intended for use in the home... It is integrated with an iChat-like functionality, but is a subsitiute for Vonage and other VOIP solutions...
You will be able to mount the phone and videoscreen on a wall or remove the handset for use elsewhere in the house (or when calling people that don't yet have video functionality) Consider this: What product would nearly everyone want, for which the technology is available, but not yet implemented? The video phone concept has been out there for years, but hasn't been brought to market for consumers until now. The United States has recently passed the 50% mark for users on broadband."
Very interesting idea Fluidinclusion! Most home phones are basically garbage, in my experience... It really might be a major new market for a very high quality feature-filled phone with video/iChat/iCal/iPhoto (Front Row?) capabilities. Might also be an easier technical nut to crack than getting into the cell phone biz. Afterall, Apple has a lot of experience in designing and building short distance wireless devices (Airport.)
except that the cell phone market is exponentially larger, and who on earth would buy a $600 wall phone??? well, I guess we'll know tomorrw.