Wow, what a constructive bunch of comments here...
First of all, the early adopters of the iPhone should be people who have a lot of extra money to spend however they want. I will not, nor do I recommend that the average consumer, purchase the first-generation iPhone. Many of the problems/issues that are bound to present themselves can be fixed through the software, which is great -- but a good point that Techno Child brings up is tied to hardware, which cannot be easily changed.
In my opinion, the biggest question is how the soft keys are really going to work. I think it's great that Apple has taken a risk and developed a smart phone with no physical buttons. Will it succeed and be functional as designed? We'll have to see, but I'm not going to spend $500 to find out. There is some amazing technology in the iPhone, but if it's not functional as a phone itself then it's not worth it.
Ultimately, I think the iPhone is very, very good for the industry regardless of whether it succeeds or fails. Innovation drives innovation and results in better and more innovative products for us to choose from. We are already seeing the development of iPhone-like devices from other manufacturers, so somebody is bound to make it work. I won't buy a first-generation iPhone, though -- I'm actually not big on buying a first-generation anything.