Rolf Howarth has made the key point here. Using data services on iPhone is so easy, so, well, Mac-like that people do it more than all other O2 customers combined.
And we now pay £35 or £45 a month to do so. That's £1.12 to £1.80 per day (depending on tariff and length of month). And for that what do you get?
Unlimited phone calls to UK landlines and UK mobiles up to reasonably high monthly limits.
Unlimited access to Cloud WiFi, EDGE and GPRS data services, with no limits which impinge on day-to-day use. (Quote O2 T&C: "Your O2 tariff for iPhone allows you unlimited use of O2 UK's Edge / GPRS networks and The Cloud's UK Wireless LAN network".) There then follow the usual restrictions on "excessive usage" and ban on using it for VOIP. Personally I'm happy with that. The telco has had to provide an infrastructure to enable me to use their service; I'm happy that their contract seeks to restrict me from using that infrastructure to access directly competing services. By analogy, we don't demand that rail companies provide railway infrastructure and then allow us to drive private cars along it.
The inclusive data services also now (v 1.1.3) power a sub-SatNav location-finder/map/directions combo using the Google Maps cludge, which, from experience, is accurate to within about 10m in UK cities, but whose maps/satellite imagery overlay is massively more intuitive than most SatNav UIs.
Plus your phone is also an iPod. And you can use it to present MP4 video by just hooking up a TV via the dock (hint: shoot it in HDV, then use Compressor to encode to MPEG-4, looks great). And, and..
Yes I like the iPhone. Yes it needs improvement. Larger capacity, video camera, voice activation. Cut and Paste text (although I can understand the problem of which swipe/wipe gesture to use without compromising the simplicity of the interface).
Remaining rant. Roaming charges are extortionate, even with the Europe Bolt-On.
Vodafone's Passport tariff is the best I've ever had. 75p connection fee from pretty much anywhere in the world then just uses up your normal inclusive minutes as if you were in the UK. If O2 offered something like this package on the iPhone, I'd be 100 percent happy.