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Missing features
The iPhone should, to be most useful, incorporate Bluetooth A2DP protocol for stereo sound. Add-on applications are needed (I use Mobipocket eBook reader quite a bit) as well, but other than enhancements to use the device in boring situations as mentioned above, there is little to add right now. It also should have Bluetooth PAN capability, and support for HSDPA or EVDO. However, the last two are things I could live without for the time being.
Voice dial is also a must-add. I use voice dial while keeping the phone in the belt holder, and given the iPhone design, it's probably the one feature that sticks out as missing.
Conclusion
Well, no device is perfect. And the iPhone isn't perfect either, but it seems to be a good leap in the right direction.
The single biggest issue with the iPhone is the "paradigm shift" that it makes to a mobile device. The quirky interface, the limitation of services and expandability - these are not "failures" per-se, but a shift in the way a communications device is defined by Apple.
The majority of people out there, as Cade Metz highlighted in the returning the iPhone article, need voice and SMS. I agree: most people I know are intimidated by anything beyond the simple features of their Nokia brick phones - most can't use the calendar or even manage a sync with their PC. (This might be an American bias...) Without a QWERTY keyboard email is nearly impossible, and web browsing is too restricted by the screen and incompatible object mapping from the web sites themselves. Music is a nice addition, while video is useless unless it's the built-in camera kind.
The iPhone approaches convergence from a different perspective. In reality it's a thin client PC with limited on-board functionality, with a phone and multimedia capability. The UI is targeted toward making this a "quick-and-dirty" device for Web 2.0 applications that are not "rich" in all content, but provide very specific interactive facilities. You don't need a keyboard or mouse to use most of the interactive features, and, with practice, the tools provided do the job very well.
Pat has written some applications that use secure web services to provide VNC capability to the iPhone, allowing him to manage his server farm remotely. This demonstrates another aspect of the paradigm shift: with the properly designed server, you don't really need most applications on the remote devices. This is not something that the iPhone is unique in using: any web phone can do this, but the iPhone provides the screen real estate to make it workable and the performance to support the local execution of AJAX, JAVA etc. fast enough to be useful.
I expect that the iPhone will have an uptake like Windows Vista: initially a big splash, then a big slowdown, then a gradual increase in penetration as a combination of user learning curve and Apple updates cleans up the initial problems. Once users that need the capabilities of web access and remote applications via a browser get more hands-on time with the device, I expect it to become more and more ubiquitous.
Recommendation
Wait for the second generation iPhone. Apple has talked about reducing chip count and increasing the battery size for the next model, as well as addressing the multitude of flaws already uncovered. While US$600 is a steep price, given the functionality that the device has the potential to deliver, it is less expensive than "the next step up" - a mini-tablet PC - and provides, in my opinion, as much functionality. ®
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COMMENTS
Re:response to my response
I use a Plantronics 510 BT (BlueTooth) headset. I didn't spend $129 US for the Apple headset.
Pictures look great. Without a flash I'm sure your photos will look dim in dark situations. The green hue of IR night vision really doesn't highlight the best features of anyone so I guess Apple didn't feel it was necessary.
Since you've obviously not used an iPhone why would I buy a Nokia (of which I've actually used) just because you have? In other words, you are not qualified to give advice here, only opinion based on inexperience.
Its not USD600!
The iPhone is not $600, it is $600 with a 2 year contract. Its a very expensive mobile device. For $800 i am sure US comsumers could buy a SIM free WM6 Smartphone with a touch screen and 3G/3.5G capabilities. The paradigm shift represented by the iPhone is not compelling, especailly for us European comsumers that have built-in GPS and 30fps video recording on mobile phones.
RE: arthritically joined at the hip to qwerty?
I now what you moan. I don't understand why people don't get productive text, it is fats and sample. Agreed you do have to chuck it or the night wands don't come out. Surely Steve Gobs must see this and correct the omission?

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