Not that it's perfect -- yet. But with Version 1.0 of the iPhone, Apple laid a solid foundation for future advances. As you read this, multitudes of developers are working to extend the functionality of the iPhone, some using Web 2.0 applications, others building native applications.
And there lies the true genius of the iPhone: OS X. Even with no official software development kit from Apple, because of iPhone's OS X foundation, the open-source community has been able to provide solutions to gaps in software that Apple has yet to release itself. Save for a couple of software updates labeled bug fixes, there hasn't been much in terms of major software announcements from Apple concerning the iPhone. The single exception was the addition of the Send to Web Gallery option, loosely tying the iPhone with Apple's recent iLife '08.
While it's clear that Apple is working to make the iPhone better, speculation about what Apple has up its sleeve remains just that: speculation. But the prospect of new applications and updates from Apple and independent developers is what makes the iPhone exciting to those who shelled out money to own one.
What needs fixing
That being said, there are a few tweaks that need to be made. The biggest issue for me is the inconsistencies in the user interface. There are certain capabilities that are available only in certain locations, yet not in apps where you think they'd make sense.
For instance, the landscape-mode keyboard works only in Safari. As nice as that is for browsing, wouldn't it make sense if all apps gained that function? I don't have any trouble typing on the virtual keyboard when the iPhone is in portrait orientation, but I could see how the larger-finger-friendly landscape keyboard mode would be beneficial to others.
Also peculiar: How come I can use the swipe gesture to delete e-mails, Short Messaging Service messages and even videos, yet I can't do the same with notes or bookmarks? This isn't a deal-breaking problem, but some consistency would be nice.
Another thing that bugs me is the inability to select multiple e-mails for deletion. Since the iPhone doesn't have spam filtering, I often find myself waking up to e-mail accounts filled with junk mail. Swipe deleting is fun for the first three e-mails. But after a bit, I found myself wondering why Apple didn't allow you to select multiple e-mails from within Mail and delete them all at once. Right now, you have to navigate to your in-box, click "edit," click the little red button next to each e-mail, and click "delete." Try doing that 25 times and see how long it takes.
And speaking of e-mails, I'd like to check one place for all of my e-mail accounts listed on the phone, yet the iPhone's user interface makes you go into each e-mail in-box individually. Certainly, the option for a universal in-box similar to the one in Mac OS X's Mail would be useful.
These quirks stand out because of how thoughtfully designed the interface is overall. After spending time with the iPhone, I've run into many more "ah-ha!" moments -- where the interaction surprises you with its intuitiveness -- than those "oh no" moments where the user interface falls short.
The beauty of the iPhone's design is that these interface quirks can be fixed because the entire interaction is based on a touch screen. When users call out these details to Apple, Apple can do something about them.
What can't be fixed (yet)
There are some shortcomings that can't be fixed in software, though, which may be a deal breaker for some. I'm referring to the lack of Global Positioning System (GPS) and 3G networking support. Since I don't live in a 3G area and most places I end up at have wireless anyway, I've not run into many issues.
Generally, AT&T's EDGE (enhanced data rates for GSM evolution) network is acceptable for Maps, e-mail and, surprisingly enough, YouTube. It's with Web browsing that EDGE falls a bit short in terms of speed. But it's still good enough for light surfing.