To me, the most significant features were a multitouch UI, large screen, capacitive multitouch screen, modern OS with advanced APIs and libraries, webkit browser, iTunes integration for music and other media, direct updates, and minimal carrier influence on design and features.
The APIs and libraries would've been nigh useless for anyone besides Apple, considering the first iPhone had no way to directly install apps to speak of.
An actual, honest PC equivalent webkit browser? Oh yes. Very much so. This one feature is symbolic of the biggest change Apple made to the smartphone market. It wasn't technology or UI design that helped them along, rather it was how they treated the platform as a small computer, rather than a PDA/Phone.
iTunes integration? Nice, but hardly revolutionary. They streamlined the process a bit using a specific piece of software to do all the work for you, but that's only a smallish tweak to an already familiar process. People have been putting videos and music onto portable devices for at least a couple of years by that point.
Large screen? Not exactly a surprise here. The Prada and other similar phones had roughly the same sized screens by that point.
Capacitive multitouch? Yes and no. Apple was, as far as I know, the first company to release a portable multitouch device. Does that mean they pioneered the entire field, and it never would've happened had they not bravely shown up on the scene? No. It's a natural evolutionary step for the previously long line of touchscreen devices to take. There have been plenty of phones that used a stylus or a single finger as the primary method of input. Plenty of devices that used the screen as the sole method of input. Apple jumped ahead of everyone else in the game, but didn't invent the idea, nor the technology behind it.
And don't say "it's obvious now that Apple's done it". That's a cop out answer. It's obvious in the sense that it's the obvious next step. Single touch makes way for multitouch. Haptic technologies are probably the next obvious step beyond that.
Direct updates and no carrier involvement? I applaud Apple for this move. It's one of the reasons why I bought my iPhone to begin with. But how is that revolutionary or unprecedented? OSes have been doing this for years. The only thing Apple did was tell the carriers off. It's a plus for their negotiation skills, nothing more.
And yet it revolutionized an industry. Strange.
Revolutionized? Arguably. Made hugely popular? Most definitely.
It's not really interesting to me to make up both sides of the discussion. I'm still hoping for an answer to a simple question. What phones, exactly, were you referring to when you said "Phones like the iPhone were already in the market"?
And it's been answered many a time. The Prada. The vast number of WinMo phones. Symbian phones. They're all natural predecessors to the iPhone, which was a device that shook things up a bit, but didn't reinvent entirely.
