I don't have an iphone, but I did just get a second generation ipod touch. So far, I really like it. There is just so much you can do on it. However, if you do not have wireless internet or are not in an area where they may have free wireless access, then I would not spend the money for the iphone. Many of the applications work using the wireless internet, although there are also many that do not.
I didn't get the iphone simply because I didn't want my phone and music player all on the same device. My phone takes a lot of wear and tear and I didn't want to take the chance with such an expensive thing. I am MUCH more careful with my mp3 players and they tend to last a lot longer than my cell phones do!