To each their own, but I don't see the downside in this specific case of the iphone. You get a good warranty with it, if something is wrong it will most likely show itself within that time. And you can't beat $100 dollars for an iphone 3g. I got mine with not a blemish on it and it functions perfectly. I realize that not all experiences with refurbished products will be like that but with the warranty who cares, you can always return it or get a new phone.
Used cars are a different story
I've had good experiences with used cars also, but you have to know what to look for and it depends on the model of car. What bothers me about buying new cars is that the value of it drops so much as soon as you leave the lot, where as a used car already has that loss incurred.