Well, no surprise there, really; my existing phone isn't great, as I've mentioned before :-) One of my friends went to the Apple Store in NY over the weekend to pick up an iPhone, and a video iChat of the device certainly gave me a good impression. Just some of the attention to detail; the phone activation was trivial (only a couple of mins in iTunes to get it set up and working) and the text message chat looks just like iChat messages. (You can see why the 2000 message limit is so high; basically, it's a portable communication device.) The internet connection looked pretty seamless; and the zoom in and zoom out was seamless. Finally, the phone came ready charged and worked out of the box ... a lot better experience than most mobile phones.
The other manufacturers should be worried; Apple's turning the mobile phone business on its head. Indeed, compared with some other phones and long contracts, the iPhone works out pretty fair, as RoughlyDrafted's analysis shows.
It's pretty clear that it's going to be a success; the question is, how much of one. And, as far as I'm concerned, who is going to get the run in the UK ... personally, I hope it's not Vodafone. T-Mobile would be a much better-placed choice, but either way, it doesn't really matter who ends up running it as long as the customer service doesn't suck. I'll be switching when the UK 3G phone comes out.