iPhone sucks if you're used to having the freedom to download free and purchase 3rd party software. I had a Sidekick II before my Treo and it was a closed operating system like the iPhone.
Not only were their few applications to choose from, you had to buy each and everyone. So if you're planning on downloading apps, forget the iPhone.
Otherwise the iPhone will make a great, but expensive mp3 player, video player, basic organizer and phone combo. With 8 gigs max, its hard to claim it as being a good movie player.