I paid $500 for a smartphone with a touchscreen, music player, email, web browser and a camera. No, this wasn't an iPhone I got before tomorrow's launch, it was a Sony Ericsson P800 and it was almost five years ago.
The iPhone hype is really getting to me: its like people haven't really looked noticed earlier smartphones before or something. At least for my $500 I got an unlocked phone with no contract requirements. It also did music-ringtones, voice dialing (critical for in-car use) and expandable storage, things the iPhone lacks.
My P800 was initially pretty unstable, but once I got a good firmware update I loved the phone. My main beef was the form factor: in touchscreen-only mode (I detached the physical keyboard) it was something of a pain: in my pocket it would wake up the screen (and drain the battery) and typing numbers with my finger was hit and miss. Typing words (with the stylus) was ok. I did like the simple email, and once I installed Opera on it I could get to the Traffic web site so I loved that too. The bluetooth worked well with my car hands-free system, with voice dialing. Synchronizing my Contacts and Calender with Outlook is very important to me, and that worked reasonably well.
In the end the physical size of the thing, plus the touchscreen annoyances made me change it. The iPhone is about the same size but half the depth of the P800, so there are some gains for the intervening five years of technology improvement. I switched to a Panasonic X800 (~$250), a flipper form factor which I much prefer, with pretty much the same features as the P800 (and the iPhone) but notably smaller, and lacking the annoying touchscreen. The X800 stayed with me until recently, when I got a (free) QTek 8500. Again pretty much the same feature set as the others, but smaller, and by far the easiest and most reliable Outlook-syncing of the three. (The QTek required a firmware update to be reliable too).
The iPhone doesn't look like its the phone for me: its too big, too expensive, it requires a two-year contract, and it has a touch-screen which will likely drive me crazy. Sure, I have yet to see one in the flesh, but neither have the huge amount of folks who claim it will change the world.