Costing over $2500 over 2 years, iPhone is — no doubt — the most expensive non-luxury gadget.
I would be very interested in discussing who ends up the smarter guy — AT&T; or Apple?

I love brands — I am sometimes ready to pay as much as 200% for a branded product.

Now for the review:

The pros of iPhone:

This is the best phone brand money can buy today
This is one of the sleekest smart-phones that exist today
Visual voice-mail is first of the kind
First smart-phone to not have a physical keyboard (we cannot declare success for this shift, just yet)
GUI is sexy
Cover view on the iPod is nice to have
In-built Stocks and Weather nice to have
Support for Google and Youtube nice to have
Accelerometer (automatic switching between landscape and portrait) is cool (iPhone is not the first)
SMS conversation view is cool

The negatives of iPhone:
EDGE, not 3G (3G supports upto 384kbps, EDGE a shameful 90kbps)
While lack of GPS is understandable (more space and power for SiRF III chips), lack of support for external GPS (like the Garmin Mobile 10) over Bluetooth is not acceptable
Cut-copy-paste not supported at all
You cannot set your favorite MP3 as your ringtone
While the camera can take still pictures, you cannot take videos
No voice dialing
No support for MMS
It is an annoyance to have the iPhone constantly prompt you with available WiFi networks (I understand you cannot change this behavior)
Voice quality is not all that fabulous

For existing iPod users switching to iPhone, there is news — good and bad:

This is the best iPod ever, with many features including artwork view
You can activate iPhone through iTunes
Finally your iPhone will include an in-built speaker

Option to manually update iPod library has been done away with.
Even usage of iPod feature in iPhone requires phone activation

Things I don’t know about iPhone:

Support for Infrared?
Support for external storage devices?
Support for Outlook Sync?

Everything you read until now concerns the product itself. What follows is my thoughts about how they wrapped and positioned the product.

I like that you can buy iPhone regardless of the current contract you may have with AT&T.; This is to say, even if you are only 6 months into the 2 year contract you have, you can buy iPhone as long as you contract for another 2 years.

I like that they have the $59.99 plan. A-la-carte voice+data+text will cost you much more. By giving an affordable all-you-can-eat plan and by not giving you a choice to remove any of the basic features, they make sure they get the basic business, sure. But they also make sure you are able to appreciate the phone for its features, many of which are network dependent.

Finally, the desi question: Can I take this home to India and insert my local SIM card?

I really don’t know that this is possible. iPhone is quad-band. So this should definitely be possible. SIM card is removable from the iPhone. Another good sign. But there are 32kb SIM cards, 64kb SIM cards, for all I know — the iPhone may be the first phone to use the nextgen SIM card. So the answer to the question at the time of writing this is — I DON’T KNOW.
AT&T; won a whopping 500,000 new 2-year contracts in 3 days
The longest wait (meaning physically standing/sitting outside a store) anybody ever did to buy an iPod is 7 days
Rumor has it that the COST (not the price) of iPhone is between $200–220. Therefore, of the $500 or $600 you pay for an iPhone, approx about 63% is direct profit to Apple
The touchscreen, the most expensive component of the iPhone, is said to be made by a German company called Balda
The CPU of iPhone is from Samsung
ARM Holdings which owns the patent for the CPU core also owns patent for another chip, both which feature inside iPhone
The power management functions of iPhone are provided by chips originally made by Philips & Texas (Instruments)
Several other companies shared the electronics inside iPhone — including Infineon, Skyworks, RF Micro Devices, Marvell, ST Microelectronics, National Semiconductor, Broadcom, NXP, Micron Technology.
Everything here is my individual opinion.