I work for Microsoft. So that probably discredits everything I'm about to say despite the fact that our family has 2 iPods and has bought hundreds of dollars worth of music from iTunes.  Here are some of the things I would have expected from the iPhone that would have been more tempting to me as an i-<Insert here> consumer.

• If it's a wireless world why not sexy wireless bluetooth headsets?  Looks like they are packaging with standard headphones + a mic.  I was hoping that those Apple folks would have come up with the first ever good looking pair of wireless stereo headphones that would have resparked that "white ear-bud envy".
• I didn't want a Moto-Q or blackjack from cingular because of the size and this thing is slightly bigger than both.  For that size I would have expected a 20-40GB model in return... good storage for all those videos they want me to pay for.
• They put in the wi-fi, but why not 3g for music downloads anywhere?
• Just like Zune, they don't let you sync with your iTunes wirelessly.  We (Microsoft) get hated on for the lack of features like this, but Apple gets a break for it.  It's feels missing on the Zune and it will feel missing from the iPhone. 
• 500-600 dollars!  With a 2-year contract?  My 3125 from cingular was free with a 2-year contract and a data plan. $50 dollars later I added 2 gb of memory and have a nice portable music player with my phone. Grand total... $50.  That screen had better be worth 10x as much.
• Web browsing. I'm sorry, but web browsing is a bad expereince with anything less than 640x480 and a keyboard. I just don't get very excited by web browsing on a small device with the limited exception of local searches that give me phone numbers. I really just don't get why everyone wants a web browser in thier toasters. Browsing is bad on my smartphone without a real keyboard and bigger screen. It's bad on the Wii with opera because of the poor resoluton and lack of a keyboard. And it's not going to be much better just because you get a touchscreen.  The best thing my phone (or any device of that size) does for web browsing is let me tether it as a modem through bluetooth so I can use my laptop.

The devices I was hoping for was a real video ipod with video ipod storage (80gb) and a seperate phone with the design of the iPod nano + bluetooth and the phone stuff.  The current iPhone just looks like the Newton I lusted over in High School.