I've owned the iPhone for 2 months and consider this the minimum amount of time that one spend with an electronic device to be able to fully assess its positive and negative aspects.
First and foremost, its functionality as a phone are for me, decent at worst. I've never had a dropped call and overall reception has been surprisingly good. Many people would assume that with everything else they were packing into the iPhone, the actual phone aspect would get overlooked, but fortunately, that isn't the case. However, I am in NY where there is more likely to be better coverage than in other areas, so of course, your mileage may vary.
The design...there's not really much else to say about the design that you haven't heard already. At this point you've been bombarded with images and video of the iPhone to the extent that you can probably draw it out to scale with a crayon and a piece of paper towel if you had to. In my opinion, the aesthetic and practical aspects of the design are pretty much perfect. The shape and dimensions are good for easy portability, the large, vibrant screen is very durable and extremely scratch resistant. There's no real fault that I can find with the product with regards to how the design holds up. Being that it is an Apple profuct, this should come as no surprise.
Now, the few down-sides to the iPhone. I'll start with the lowest level of severity.
-The battery life is not great. Well, it's not terrible either, and considering how large the screen is, and all the things it does, it shouldn't come as a surprise that the battery life isn't spectacular. Still, I like taking comfort in the fact that sometimes, if I forget to charge my phone overnight, I won't have to worry about it dying on my halfway through the next day, but with the iPhone, I do.
- iPod functionality and stability is mediocre. I say this because i've had the iPod feature crash on me at least twice a week. It's not a big crash where the system locks up and I have to reset, the phone actually just goes back to the home screen. But still, i've almost never had my iPod nano consistently bug out like the iPod function on the iPhone does.
-This is related to the iPod functionality. Sometimes I have long audio tracks that I listen to and the only way to fast forward is to drag a tiny dot along a line to the point where I want to go. There's only one problem though, once you drag the dot to the appropriate time, you take your finger off the screen and the time jumps because it's way too sensitive. If i want to fast-forward to 2 hours and 32 minutes, half the time I can only get it to 2 hours and 20 minutes or something ridiculous like that. Apple needs to implement a virtual scroll-wheel function or something because this current method is terrible and extremely frustrating.
In summary, the iPhone is a great full-featured phone that does many things well and only has a few irritating, but not deal-breaking drawbacks.