Depends on what you are looking for. The iPhone is now $399, and is a true mobile device. There are tons of extras you can out on the phone once you mod it, which is very easy now-a-days.
However, there are limitations.
1) you cannot multi-person text (group texting). 1 message per person
2) No Flash Support. If the site has it, you cannot see it.
3) No copy Paste feature as of yet
4) without moding the phone, you cannot change icons, customize, etc. But since moding is easy, this is one of those things that is overlooked.
There are several others that escape me at the moment, but if you do the research, I'm sure that you will find them all.
I came from a Nokia 6620 Smartphone, and there are a couple things that I miss, but I love my iPhone, and as time goes on, the limitations are either over-come, or you learn to get along without them.
I have both a nextel and an iPhone. I used to like the direct connect, but now its just annoying to me. Hard to understand what people are saying over it. If I had to break a contract to get an iPhone I would not. I am a patient person though.