The iPhone is a great product but the cost has always put me off especially with the UK service contracts which are very expensive and lock you into 12 or 18 month contracts. At the moment I pay around $30 per month for 10 Mbit/sec Broadband and 3G mobile broadband (1 Gbyte/Month download limit) as a package and pay virtually nothing (about $0.015 per minute for the PAYG VOIP connection) for phone calls (landline or mobile) using VOIP. (this gives around 1000 minutes/month for around $22 including the cost of the VOIP calls and the 3G Broadband connection)

The 3G mobile broadband connection provides the mobile VOIP connection using a portable 3G WiFi router + inclusive 3G USB dongle and a WiFi capable handset with a VOIP client (which switches automatically from the home WiFi network to the mobile WiFi and back again when the home WiFi network is detected). Portable Internet access is provided by using an Archos 605 which has a higher resolution easier to read screen than either the iPhone/iPod Touch, with none of that annoying zooming in/out to full view web pages. Of course the only issue is having to carry 2 or 3 bits of kit around, but the advantages of the flexibility, cost and not being tied to one over riding comms/network platform outweigh the inconvenience.