I would get excited for the iPhone if they would get ATTs plan pricing down to $40 or open it up for other carriers who could compete on plan pricing. I don't even mid the $400 phone so much - I would be able to swap out my touch so the total I'd spend on "junk" would be pretty much the same.
I mean, the cost of the phone is only 25% of the real price. If they HALF the hardware cost you only save 13%. The need to get the monthly plan to around $40 before the "masses" will care.