I tend to agree, as a multi-function device (phone/browser/pda) the iPhone is reasonable, though as a pda it is slightly sub-par (having to use a scroll wheel to select date/time for an entry? what where they thinking from a design point of view?), but its reasonable for the Western market.
The Japanese however are loyal to the point of obsession. If they get wind that Apple are gunning for Nintendo in a fight in Japan, the iPhone sales in Japan will drop like a brick whilst Nintendo sales will, well, I'd say rocket but they are already massive over there.
I don't think Nintendo nor Sony will be worrying at all about the iPhone in the gamer market, simply because the choice of games they offer are different in many ways to the games that the iPhone have. Sony/Nintendo and to an extent Microsoft can (and do) pull the "exclusive" card, Xbox has Halo, Sony has Tekken/Gran Turismo, Nintendo has Mario/Zelda, the iPhone has fart applications.
However, the iPhone is already old hat, the OS hasn't really changed in 2 years, just added more apps to it, and a compass. If you look at version 1.4 of the iPhone OS you won't see many changes between that and 3.1.2, just hardware upgrades, this is allowing other phone companies to catch up and over-take Apple on the UI front, the phone I'm most looking forward to is the new Nokia with that Linux os that I can't remember, looks fantastic.
On the other hand, Apple are locking people in to their "way of life", all the apps downloaded, all the music downloaded all to the Apple device, if you want to keep them there is only one upgrade path, another Apple device, where you get more apps and music so get further locked down into the Apple way of thinking, either that or turn off the phone part (or shove in a PAYG sim) and use the iPhone as an iPod touch.
Now, I actually own an iPhone and I generally hate the device, I can't see what the fuss is about, its unlocked and jailbroken running on vodaphone so I get to choose my Apps, but nothing about the phone has made be go "wow", well, except "wow, my hands are getting warm from the heat this thing generates".
Nokia won't be looking at Apple as a threat, in the phone market they are selling small amounts of mobile phones, in the game market the iPhone can't compete with a dedicated game device, if they could then you can bet your bottom dollar that the next PSP to come out will have a built in mobile phone, touch screen, buttons (important for games) and exclusive top-tier games, as well as all the lovely hi-tech phone wizardry that the Japanese expect from their mobile phones.