I've been ticked off with my Smartphone lately and love my iPod Nano so was totally stoked about the new iPhone, until I went and spent and hour with it in the Apple Store.  I was sorely disappointed. :(  Here's why...

The iPhone

Pros

• Beautiful UI!
• Love the zoom in the browser
• Automatic rotating screen
• Browsing music by album art is great
• Excellent Google integration, wow
• Camera is easy, fast, and decent quality

Cons

• No Voice Memo Support
  Doesn't support voice memos!  I use my phones to leave myself memos all the time.  This alone was a deal breaker.
• Freak'n Slow Internet
  Sure the Internet seamed fast in the Apple store, but when I took it off the store's WiFi and ran it off the cell phone network (Edge), it was SLOW!!  Like an old fashioned modem.  Way to slow.
• Won't Sync Wirelessly
  It doesn't sync calendar & contacts wirelessly.  You have to physically plug it in to the PC to sync.  Oh, and iTunes already crashes every time I try to sync my iPod with Outlook.
• Music Stopped
  This was so strange, I'd start some music, then within ~15-30 sec of browsing the net it'd stop the music.  Every time.  You'd think it could multitask.
• Bluetooth Stereo Audio
  One of the features I was most excited about was the coming together of an iPod and Bluetooth, for stereo Bluetooth audio (A2DP).  We should be living in an age where wires should be optional for mobile devices, but no luck here!
• Hanging Browser
  Even over 802.11b about every 3rd blog I visited on the browser either took a real long time to render, or just would hang.  This was unacceptable as blogs are my favorite sites to visit.
• Other Issues
  There are plenty of other small details, like not having a developers kit (and unlikely for the PC), it's completely dead without cell phone activation, you can't browse contacts by photo (like the album listing) etc.  These weren't show stoppers for me, I would've gotten on if it wasn't for the other points above.

My Smartphone

Okay, this post is about my evaluation of the iPhone, but for contrast I'll list a few pros & cons w/ my Smartphone experience.  Given my phone is a little older (Windows Mobile 5), I haven't noticed that my Cons have been addressed in the current Windows Mobile 6 devices yet.

Pros: Voice Memos, can support Bluetooth Audio via a little software add-on, I can write apps on my PC for the device, some have 3G (much faster than edge) support, tons of apps you can add on, easy integration with Outlook or Exchange, easy customization (w/ XML files), can be used w/ my laptop for Internet, etc

Cons: Most devices still don't have a standard headphone jack for earphones (I hate carrying around the adapter to where I just don't use it for music), the media player experience browsing music is lousy, the Outlook reminders are annoying and can't be disabled, my device has a lot of quirks (frequently drops calls w/ 'full' signal on AT&T, sometimes makes a very loud trashy noise when ringing, etc), the call history log doesn't roll over (so it won't log calls if it is full), it could take it up to 8 minutes to reestablish a connection if it's been in my office for awhile, sorting of notes is wrong (1,10,11,2,etc), etc

In Conclusion

I'm no Walt Mossberg. It's not my goal to crush anyone's dreams of owning their first iPhone. I know you've heard this a million times, but never, never has it been more true for any technology product: wait for version 2.0 before buying.  [Jeff Atwood in Why You Don't Want an iPhone -- Yet]

After evaluating the iPhone, I was much more content with my Smartphone.  I certainly hope the next gen iPhone is significantly improved.  Most v1 products are just about establishing position in a new market, and are not full featured.  The Smartphones have improved a lot, but there are still plenty of kinks to be worked out.  Perhaps the next HTC Smartphone will combine the best of both worlds.