Even though the iPhone is revolutionary I think Steve Jobs is making a huge mistake by not opening up application development for 3rd party. This can be done by providing Apple certification program which ensure the quality of these 3rd party applications. Then its up to the consumer to buy apple certified program or take the risk in running into problems. But to make this a closed system is a huge mistake.
Another limitation that Apple put itself by going through Cingular is not opening the opportunity for Voice Over IP (VOIP) solutions such as the popular service of Skype.
Other than that, I think this is going to be a phenomenal product. Check out this video: