I'm willing to bet there will be third party apps, but, sadly, that they will follow the ipod model and only allow a small handful of developers to produce the software and only allow it to be available on itunes.
If they add flash, allow adding icons to the "home screen" that link to urls, and add something like google gears, I'll be happy enough. If they add more links to internal databases from web applications, even better.
I've been coding iphone webapps for a couple of weeks, and a lot is possible, but if they would just make a few changes some really nice stuff could be done. If an application can be run without network connectivity and could store its data locally and interact with other iphone apps (and if we could hide the damned toolbar) the end user wouldn't know the difference between a native os-x app and a web app. I do think they will make some of these changes as well.
I'd still prefer a real sdk ala palm or wm.