I'm amazed they managed to keep it secret right up until the announcement despite all the months of speculation. The R&D that must have gone into that thing is huge.
It'll be massive. It doesn't really do much that other high end phones don't but it completely rewrites the way it is done. (Check the demo vids on the apple site). I'm someone who just wants a decent phone that works well(no need for camera, mp3 player, calendar etc) but when it integrates everything so well like this why carry an mp3 player and a phone around. And the small matter of having OS X in your pockets. Imagine all the useful widgets that will really come into their own 'on the hoof'.
I couple of reservations I'd like to see addressed first. Battery life of course. (though I could live with putting it in a syncing/charging dock whenever I'm home - I know many coudn't) And general ergonomic factors like the practicality of the touch screen - apple usually don't dissappoint, but we'll see.