I would have to agree. The 3G has some major issues when it comes to lag sometimes, after I upgraded to 3.0, that is. The 3GS is much more peppy when it comes to processing tasks.
I have used both of my iPhones and my iPod touch for just about everything the devices are made for. I email, browse, text, take pictures and video, run apps like games and productivity tools, as well as use it for shopping lists, to do lists, writing documents and numerous other things.
A lot of computer manufacturers these days are trying to make their niche with lightweight portable computers that fit into handbags and large pockets. Sony is a good example. They have their P Series notebook, small and sexy looking, but most people that review it say the same thing, it is too big to fit in a pocket comfortably, or usually completely. The issue would be that I would use it for the same exact things that I use the iPhone for now. I would still be paying for the internet connection, so I could browse wherever I can get signal, downloading apps, writing documents, checking emails, etc. The one major difference is what you mentioned previously, and that is the phone functionality. I mean the GSM telephone calling ability, not Skype, or some other VoIP software.
One last thing, the iPhone fits perfectly in my pocket, also. Is the iPhone the end all of pocketable personal computers.....no. There will always be someone that can add more functionality in the small form factor of a phone, but Apple has their niche right now, let's see how long they can hold onto it.