I am in San Francisco this week and got to play with an iPhone for the first time.
Very cool device, but I am not sure I could live with the keyboard (or lack of it). I typed a short message and found it painful; you simply cannot see which key you are pressing until the result appears, often not the one you wanted. It is fine for numbers, since the virtual keys are larger.
In mitigation, the iPhone has text recognition algorithms that take this into account. If you have faith, then quite often the word you wanted does appear, even though you mis-typed it. Fair enough, but I prefer a real keyboard which gives you tactile feedback. That said, I agree with the decision not to resort to a stylus, which is always a nuisance on a handheld device.
Omitting a physical keypad does mean the iPhone has a larger screen than most devices of its size, and as you would expect the multimedia is nicely done. Unfortunately I am a text-oriented user, so I would rather have a real keyboard and a smaller screen. And yes, I am a QWERTY user.
Could I learn to love the soft keyboard? Possibly, but there is also the price to consider. The iPhone seems extraordinarily expensive for a locked-down device. I’ll be interested to see what the UK pricing is like when it appears there in due course.