Being relatively divorced from all the iPhone hype, it only recently impinged on my consciousness with any depth, after the launch. The way the UI works -- horizontal and vertical views, magnifying, 'swooshing' and so on ... all very cool. What it makes me think about is what it takes to take things to a next level (Like with the invention of the mouse). I think the guys at Apple *really* understand the idea of a User Interface. At a lesser level of understanding, a user interface is the keyboard, mouse and screen and a person would try to think about how to improve the way a keyboard works (qwerty and so on) better mice (cordless) and all that. All nice, useful neat stuff. But when something like the iPhone happens, it seems the guys have been thinking at a much higher level, at a meta level, which requires a deeper understanding of what UI is. I remember a snippet from a book by Bruce Tognazzini, one of the gurus from Apple (he was at Healtheon for some time), and he talked of going camping and then coming back and bumping into things all over the house because the nature of the space was different. This chap could it seems relate UI and design to the much broader area of the relationship of yourself to your surroundings. And if you're able to discipline yourself enough to apply such broad concepts to the concrete task of making a cellphone UI, then you come up with something cool like iPhone. Steve Jobs perhaps brings the ability to make talented designers focus in that way.
If you're as out of it as I am, here's a page with iPhone videos. The one titled "Apple iPhone" does a demo of all the cool features.
http://www.cnet.com/apple-iphone.html