I'll give a few reasons and background for people that may be up in the air about buying a 3G (don't buy that) or 3GS over a blackberry or something else.
I have owned normal phones, samsung sync comes to mind. Great regular phone btw. I then owned a samsung blackjack 2, which I ended up hating b/c of the OS. I run only windows PC (that's not the point, so no flaming guys) and I figured windows mobile would be idea, but it ended up being useless. The phone itself is very high in build quality.
I decided to move to apple over blackberry for an HTC fuze for functional, non-superficial reasons.
The blackberry just doesn't handle video how I would like it to due to the screen size and the fuze is actually too small for me, plus after using the iPhone keyboard, I do NOT want a physical keyboard anymore. I also could not use a blackberry for its intended purposes and I do not like the layout of the OS itself and the lack of a touch screen on the Bold (that's the only blackberry I would consider buying).
The iPhone does a few things for me that I really enjoy. The large touch screen is ideal for obvious reasons. Safari handles the web amazingly well, fast and supports real non-mobile sites. While windows mobile has 3rd party programs for internet, I'd rather not deal with the third party support. As well, the way windows mobile handles connecting to wifi is oversimplified and in the end, actually makes it more difficult. I think apple did a great job implimenting wifi in the device.
Other than that, the maps app that the phone comes with, banking, weather, easy to use email, camera, skype, an easy to use real calculator, and a few other apps make the phone ideal for me. Games, ebay,amazon, apps to find restaurants, and IM apps sweeten the deal, especially since everything I use, besides one app, is free.
As well, I like the addiction of a switch to turn off the ringer. I don't see why more phones don't have this physical option.
Using the phone as an iPod also negates the use for two devices and 32 gigs is JUST enough for me right now. I have about 25 gigs of music on the device and converting movies to 480x320 still takes up a good amount of room, so it meets my bare minimum for space w/o having to buy an external memory card for a blackberry.
My only concern is the quality of the phone. All other phones I've owned, a nokia and two samsung models, were build better IMHO. I had no obvious defects on the phone, it looks like the picture. My iPhone bezel is uneven on the top-right face, and the sleep button is not perfectly even on the top either. While I don't notice this since the phone is in a case, it makes me highly doubt the "quality' that Apple is known for. My other phones were mass produced and they were all perfect. I'll have absolutely no issue returning my phone is it starts to crack since Apple should have increased the production quality from the beginning instead of wasting our time with time-consuming switch outs. I'd gladly pay $20 more for a phone with an aluminum back casing.
That said, the lower build quality was not enough to outweigh the benefits and usability of the phone, and that's saying a lot from a guy who will not buy a computer to run OSX. I also didn't feel the "Apple Tax' when I made my purchase since the cost is on par with high end windows mobile and blackberry phones.
I upgraded from a Sony Ericsson K770i to an 8GB iPhone, before upgrading in 2008 to a black 16GB iPhone 3G. So far, only 1 hairline crack around the headphone jack but it's quite hard to see, so I ignore it. 
