Cool! But I want to see what its like on the AT&T Network.
The AT&T EDGE network gets consistent downstream transfer rates of about 48kbps -- a little slower than a good dial-up connection. For Wi-Fi on a mobile device, those transfer rates are about par, if perhaps a little above. But Web access over the EDGE network is bringing back the World Wide Wait. Even browsing will be an egregious pain unless you target sites specifically designed for devices with low-speed wireless connections.
This is why it looks like the iPhone itself is a great device, but the service integration is going to be awful. Even e-mail with attachments will be a pain. This would be okay if you weren't talking two-year contracts of voice with an all-you-can-eat data plan -- you certainly don't won't to be paying a metered rate checking your e-mail or looking up something on the Web.
You'll pay $500 for the device with the storage capacity of an iPod nano. At least $80 a month for your carrier service. A great Web browser that's only useful in range of Wi-Fi access point.
The thing has a great interface and does something interesting things with non-linear voice mail access, etc. But if you're expecting a total mobile communications device at anywhere near the convenience you have with your desktop, you'll be out of luck. Of course all this very attractive interface technology can later surface in a new iPod, but all it's going to do is change the iPod interface, not add functionality to the iPod. I'm not even sure it's a viable iPod interface. We're used to smudged up mobile phone screens but we hate them with our iPods and similar devices. Unfortunately, adding Wi-Fi and/or Bluetooth to the iPods is going to smack battery life.
I still think Apple will certainly at first sell a ton of these, but I'm going to be at a loss as to exactly why. Beyond fashion. T-Mobiles Sidekick product sells very well and is very popular to own, but it's a *cell* phone with *keyboard*. Wooh. Again, I repeat this AT&T's glory, as they'll entrap a bunch of Mac and iPod customers with the iPhone into their over-priced, lackluster voice and data service. For Apple, the benefit will all be in PR for another successful gadget.