1) No support for flac files, what you want to hear your music lossy? I don't. Apple Lossless is inferior to flac. Flac is THE standard for lossless audio.
2) No cut and paste. For word processing, emailing and quoting articles, etc., the iPhone is useless.
3) No support for Flash, so my iPhone is useless with streaming audio and video. Very limited amount of internet radio station with Tuner app. No local radio stations can be streamed via Tuner from their websites.
4) Very limited software for usage like Office Suites.
I guess the iPhone G3 is good for watching vids. Still, the iPhone will not support most of the common files. I know, I can convert them. But why should I have to just because Apple to totally stuck up?