The HTC Touch interests me much more.
http://www.phonescoop.com/articles/htc_touch/
But it does not have much storage capacity, but I'm sure that can be mitigated with larger flash cards.
But I'm not going to give up my iRiver anytime soon, since I use FLAC files.
Plus, the most important part of any phone is the Carrier. GSM works poorly in my neighborhood, and Sprint is much cheaper and offers a lot more features (like truly unlimited internet/data access, and unlimited txt msg). So unless Cingular/AT&T gets their act together, installs more towers, and offers competitive plans, I won't be leaving Sprint anytime soon.
As for the pure music function in the iPhone I see two big problems.
1. Battery life. The battery is not swappable. Although it is reported that it will have separate battery sections for multimedia parts and phone parts, they are still fighting for the same power, since it's size limits the amount of battery storage onboard.
2. Multiple radio antennas to introduce noise and interference. This thing is going to be chock full of RFI. With wifi, bluetooth, and cellular radio all a potential to degrade sound quality.
Of course, we won't know how well it performs until it's out in the public.
But I'm willing to bet that the battery life will suck ass.
I expect to see a lot of aftermarket battery packs and add-ons hitting the market for the iPhone.
-Ed