In my imaginings of the future Apple iPhone (http://www.apple.com/iphone/), I thought they'd start with a flip design, then go widescreen candy bar after a widescreen iPod was released. Thus, I was honestly surprised to see them cram about three layers of evolution into one device that beats the technological crap out of every handheld device out there. That's not hype people. Check out the specs.
Multi-touch widescreen: Anyone can roll out a device with a touchscreen. Apple's delivering one that responds to multiple points of contact. As far as I know, that's a new development for a handheld computer, and it opens a ton of data manipulation possibilities, the least of which is expanding and contracting images.
Automatic screen rotation: On a tablet, this would annoy me. On a handheld, this is a killer feature. Switch from landscape to portrait layout just by turning the device. Highly valuable when viewing photos and switching to phone from watching a video. Sounds like a very intuitive form of interface.
Wireless trifecta: EDGE is not the fastest mobile data service, but it works for typical mobile communication and wifi opens up the hotspot option when available. Bluetooth is almost a necessity given the army of headset Borgs out there, but it also opens the external keyboard option in case the touchscreen 'board isn't enough. Nothing we haven't seen on other devices, but this is a no-compromise wireless package for the vast majority of mobile warriors.
Mac OS X designed for a small screen: I have written a couple of posts (http://sumocat.blogspot.com/2006/12/small-screens-with-small-operating.html) pushing the idea that handheld computers should run operating systems designed for small screens, such as Windows Mobile, rather than systems intended for larger screens, such as Windows XP. It is my opinion that if Microsoft wants to push a full version of Windows, like Vista, on a small device, they need better support for small screens. The same holds true for Apple, except Apple has stepped up and done it by streamlining a version of OS X that works on a small screen the way Windows Mobile does, except it has the superior stability and power of OS X. It's like my dream come true but in Apple form.
Bottom line: Aside from offering "merely" competitive wireless connectivity, the Apple iPhone exceeds every other handheld computer by a huge margin. Furthermore, by running a version of OS X, it has vast potential for applications to fill its shortcomings, and it already has a big accessory aftermarket because it's an iPod.
That said, however, it has one major shortcoming; it is not a standalone device. Like the iPod, it is intended to sync with a Mac or PC. No direct downloads from the iTunes Store. Probably no podcatching, though I'm sure that would be easy to add in. That's hardly a fatal flaw, since it clearly did not hinder iPod sales, but I feel there was some potential missed there. Perhaps in the future it will be more independent. For now though, it must settle for simply being the most advanced mobile phone to date.
Oh, one more thing, anyone else look at this iPhone and see a small Tablet PC? Just upsize the hardware, software, and physical dimensions, and it turns into a Mac tablet with a multi-touch screen and phone capability. C'mon Apple, your foray into the tablet market is an expansion away.