The iPhone (picture gallery) utterly changes everything notion we have had about what constitutes a phone/PDA. Like many of Apple's previous design efforts, it will force every other portable device maker to rethink their own designs. But I think Apple has made one mistake that will really limit the potential of the device.
Apple is going to market this as a closed platform, meaning users and developers will not be able to install their own programs and software. There are few forces in the universe more powerful than thousands of nerds writing new applications, and Apple, by trying to control what people are able to do with the iPhone, is making a mistake. The iPhone is pricey, and will certainly be a status device, but a lot of people simply won't bother if they can't adapt such a powerful tool for new uses. As nice as the product is, I'll stick with my Treo, where I can pick and choose what I want to put on it.