I think it definately is a product only for spoiled rich kids.
In fact other than a flashy animated interface, it does not provide any new features or any better usabillity. It's like websites that are designed in Flash in comparison to websites designed in HTML. Flashy interfaces actually remove some usabillity and features to replace with some WOW factor which only impresses people who don't know what the Web really is for.
The iPhone actually costs 2000 dollars at the minimum because you are locked for 2 years at the minimum for 60 dollars per month on an outdated data plan technology.