http://reviews.cnet.com/4370-11399_7-332-101.html

Having said that, I love the phone. After having it for over a month, I cannot imagine not having it now. I went through the same thing with TiVo. I got a free unit (rebate) with my DirectTV years ago and living without one is rough.

Pros
-8gig iPod (integrates with my iTunes which was already setup for my old iPod, that I no longer need to carry) I know its not as big, but 8gig is plenty for me. I used this part of the phone everyday at my job while I work.
-Web browser. Much better than the browsers on my Treo or Blackjack phones. I have to carry a BlackBerry for work and the browser on that is horrid, too. Browser performs really well and can have multiple windows open. Renders everything, other than Flash
-Youtube. Sounds lame, but its entertaining and can eat up the time if you're stuck someplace.
-Google maps. Again, I had downloaded and installed the maps viewer for my Blackjack, but the interface on the iPhone is much better.
-Visual voicemail. If you get a lot of messages, its handy to just look at a list of people that called and skip to their message without listening to others. Or you can delete one without calling in and listening.
-screen quality. By far the best I've owned. Touch interface is nice after you get used to it, too. I believe its glass, so I've gotten no scratches, but you do get the oily smudges on it. That is the same with every smartphone, though.
-Images app. I uploaded family photos to it and it looks a lot better than the digital photo frames and products like that. Obviously the screen is smaller, though.

Cons
-no Flash support on the browser. My understanding is that this is something Apple is dragging their feet on.
-Camera. Not bad for a phone, but nothing you would use on a daily basis.
-8gig storage. I remember getting all hyped up about my first PC with a 1.2gig harddrive. Its easy to use up the space if you have a large music collection. Not really a knock, but I'm sure they will release a larger capacity now that I have an iPhone.
-plug interface. Requires me to buy new chargers for the car, etc rather than the standard mini-usb jack on many phones.
-AT&T only (unless you hack it). Not a problem for me since I was already on AT&T, but some people will have issues with this.

I know they are making a 3G version of the iPhone next year to use the faster data network. I would assume they would upgrade the storage as well.

Basically, if you do not have a library of music in iTunes, are anti-Apple, do not browse the web on the go, and just need a basic cellphone, this is not for you at all. I use it for my consulting work and its been a better product for me personally than the windows mobile phones and the Blackberry.