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So, according to this article, the killer things about the iPhone appear to be its interface (touchscreen? well, my PDA does that - the "gestures" thing is admittedly a ways off), and the fact you can browse the web on it... which my non-smartphone SE K750 does just fine over a WAP or GPRS connection. I can even look up recipes on Google as well! And run the Gmail app. And play music, if I really wanted to on a phone. And so on.
Yep, paying $US600 for a pretty interface and bugger all extra functionality sounds like a poor bargain indeed. But if you want the web-browsing "feature", any mid-range and up phone in the last 5 years would give you precisely that (albeit on a smaller screen, unless you sprung for a smartphone with more real estate).