Let me start my saying that I was the last person to buy into the whole Apple philosophy, but my MP3 player was biting the dust, my SonyEricsson p990 was absolute pants and my blackberry kept getting dust behind the screen and getting scratched. I needed a replacement.
I've now had the last two iterations of the iPhone, now using the 32GB 3GS and to be honest it is the best mobile device I have ever owned. It plays music, video, podcasts. It does email pretty well now that gmail 'pushes' and copy / cut & paste and picture messaging have finally arrived.
Other bonus features that I use it for are RDP-ing to my home PC when I need to perform an action on that PC. Accessing my home NAS and streaming music and video over 3G or WiFi to my iPhone. Safari is a great web browser as zooming in and out makes browsing a breeze.
I really didnt want to like the iPhone but find that it is a fantastic device. I used to use Pocket PC v2 & 3 many years ago and vowed never to return. It seems in the time since then that Pcoket PC / Windows Mobile hasnt got much better. Maybe v7 will be what it needs to for this platform to survive.
Android is another prospect. The HTC Hero looks to be a fantastic device.
In anycase my contract is up in January so I will either keep my iPhone until next June when the next version is out and get that or buy an android phone.
I Hope this helps
CK