I pretty blown away with it to be honest and my wife is in a right huff because she's stuck with her Orange contract for another 11 months
For me the iPhone is replacing the following devices:
a) A Sony Ericsson K750i
b) A 1G iPod Nano
c) A Nokia N800 Internet Tablet
My initial impressions on how well it replaces these respectively are:
a) Yes it takes a few more swishes of your finger to carry out the same tasks but the enjoyment you get actually doing those swishes seems to make you forget about the extra time it takes, maybe this will wear off in time.
I already miss MMS messaging, I cannot believe Apple will not add this in 1.1.3 etc
Call quality sounds reasonable.
The keyboard is great, I was expecting a complete horror show but I tapped out a fairly long post in another thread comfortably (this post is on my MacPro)
Indoors the camera is pretty poop, maybe they'll improve the software, I don't know, but it's a sacrifice I'm will to take... as long as they add MMS!
b) The iPod part is so slick, I nearly wet myself with joy when an SMS message came in whilst I was watching a Tenacious D video
c) Web browsing... I was really surprised with this... it's a better browsing experience than the N800 provides. The sheer responsiveness of the interface easily makes up for the inferior screen resolution. I have not browsed over EDGE yet as I will mainly be running off the home WiFi, but the N800 sucked over GPRS too so it can't be worse.
So overall as a single v1.0 device it's quite astonishing, if I was Nokia etc I'd be worried... not so much about iPhone v1.0 because they can still shout about the missing hardware/software features... but when iPhone v2.0 comes out and matches the competition in the hardware stakes (3G/GPS etc) how the hell are Nokia etc going to compete?!?!