I'm a long time Treo user on Sprint as is my Brother.
The thing about my Treo, is I put some 3rd party applications on it like the one to edit word/excel docs, but I ended up only using it to really read documents or make small notes (which the iPhone notes is a much better implementation and looks great). And the Treo had a Memo option similar to that, but it was worst implementation of a Memo ever.
But overall, I used my treo to text, e-mail, and make phone calls... What I'm sure 90% of the people with Treo's use it for. I know it's possible to put VLC, Slingbox, Music players, etc on your Treo, but how many people use these even if they have them installed? I know I had Slingbox and used it once or twice to just show off.
Now if you look at what 90% of the Treo users probably use it for: text, e-mail, phone calls... the iPhone does all of that and not only makes it look pretty, but is probably 10 times better at the implementation; especially the phone call interface.
My brother actually got the newest Treo that Sprint offers a couple of months ago, and we did some tests with his phone(without any 3rd party apps installed because he didn't have any) and my iPhone.
First was the Google Maps test. We looked for Borders near where we were, and we both found it in about the same time. However, for him, he only had 2 buttons on the screen for going between the locations. I had Satellite View, List View to see all places in a list and could even click on them to instantly call, I had Map view with traffic(which he had also), and I could even pinch the screen, double tap to zoom, all of which he couldn't do on his simple Google Maps program. And not only that, all the animations from the pins falling on to the map, to the bouncing titles when you click on the pins, to the flipping of the menu when you click List was all beautiful compared to his simple tap and laggy transitions from one option to the next.
The other interesting test we did was to call our Mom, and then call someone else to conference. He conferenced them, but wasn't able to switch between the calls privately or even add any more people on. He had to hang up on both of them to finally end the call.
Then I called with my iPhone and was able to seamlessly, with just a tap of my finger, switch from conference to private, and I even added 2 more people to the line and switched between them. Why hasn't a phone manufacturer who's been around for YEARS not made the CALLING part of the PHONE that simple yet? That's like the most basic feature, and the iPhone kills it at that.
So I mean, it's all about quantity over quality. The Treo focuses on packing lots of features that you'll never use in the phone, while the iPhone takes all those features you are most likely to use and makes them not only look beautiful, but tends to be a better implementation and more usable.
You're more likely to use a Calendar App when it looks and feels great instead of when it's full of features in the menu but looks like crap.
And the funny thing is the iPhone isn't even a full-fledged Smart Phone if you think about it. It lacks a lot of the features the Blackberry has for businesses users, but it seems to be scaring that crowd already. Imagine when they start really marketing the iPhone towards that crowd with newer features. Right now they're just trying to make it somewhat work with those people, while marketing it more as a phone/ipod/wifi/internet device with intuitive menus.
