I haven't had time to write up all my impressions of my first day with an iPhone, but I am perfectly happy to admit that it exceeded my expectations, partly because I was prepared to be slightly let down by some of the bigger promises. I've written up some of this, including my process of buying the phone, over at TidBITS.
What's still valid about my hesitation in recommending the first-generation iPhone is that AT&T's EDGE network truly is too slow for anything but simpler text-heavy Web sites and for email, and that viewing Web pages and other text that's designed for wide-column layout is hard to read on screen. The former problem will be solved with an updated piece of hardware that uses the third-generation (3G) cell network. The latter problem could be solved in software, by offering an option to rewrap text streams into narrower columns for better legibility.
That said, the damn thing is a wonder. It's the niftiest piece of technology I've ever used or held. It truly feels like something dropped out of the future. Every feature works, even if I'm finding some rough edges or missing pieces. But nothing I've tried is broken. That's a big deal in an age where stuff is shipped too early, or in quasi-beta states. The iPhone probably tries to do too much in a first release, and some of that shows, but by biting off a specific set of Internet-focused tasks on top of telephony and iPod features, Apple's team made it achievable.