iPhone owner here and I have only 2 complaints...no mp3 ringtones (unless you edit your own 30 second one's which is actually easy enough) and the build quality.
I'm on my 4th handset now and think I may end up replacing that as well as dust has gotten behind the screen again slightly and it's troubling my OCD side

. This also happened on my previous 2 handsets and I think it could possibly be linked to a batch of reconditioned iPhones that store has. The first handset I got, no dust behind the screen, but the wifi chip died. However, even though the reliability is a bit of an issue, I went into the Apple Store and got a replacement handset on the spot with no issues whatsoever. I've never had a better customer service experience than with Apple. Thank God I wasn't dealing with o2, they were a nightmare when my w880 went tits up
The interface is brilliant though. No keyboard, fair enough, but it's such a total breeze and actually really intuitive. Loads of tricks and tweeks you can do, even if you don't jailbreak it, but if you do, you can do loads, running game emulators and the like.
The camera is pretty basic, there's not many if any shoot options and no flash of course, but the actual 2MP pics are pretty decent. Better than my old SE phones. The screen is the best I've ever seen as well, blows the Pixon and other touch screen phones I've had a hands-on with out of the water.
Apps...every app I have is free and fair enough, loads of gimmicks, but there's some good fun and useful stuff to be had. eBay, Last FM, Google Earth, wifi Remote for your iTunes, etc, etc and they're all free.
I do wish the build was better and the interface a bit more customisable out of the box, but I reckon it's a great handset. I still reckon as well Apple isn't as evil as MS, they've got a heck of a long way to go till they reach that.
Just to add as well...my iPhone was free on contract from o2. £35 a month for 500 minutes, 600 texts and unlimited data.
My other options at the time were the Samsung i8510 and indeed the n96/n95 8gb. I didn't go for them simply because I'd have paid between £99 and £199 for those handsets under the same kind of contract (but without the unlimited data). If you can get them cheap though, I'd suggest one of the Symbian phones. They may not be as flash as the iPhone, but they offer more flexibility for many users.
Me, I like my iPhone even with it's few faults, so there