This “too expensive” angle has been played out. I’ve owned Sidekick, Treo, Blackberry and even nice non-smart SonyEricsson phones. They all had their quirks and I always ended up moving to another phone to fill some deficiency or missing feature. My iPhone is much, much better than all of them.
There are a few things you use everyday like maybe your car, mobile phone, computer/notebook, and so on. I am willing to spend more on those things I use everyday if it makes like easier, less complicated, or better in some way. That works for me. However, I don’t spend money on things like cable TV, a DVD library, etc.
It’s also not about showing off or status symbols because I don’t LIKE showing off my stuff, I’m generally too modest for that. I like demoing the technology, not the products themselves.
I really think the iPhone compared to any other phone is similar to the difference between Mac OS X and Windows. The Mac may not be able to do absolutely everything Windows can do, but it does most things in a way that actually makes sense. Sometimes there is a premium to pay for this.
A illustration of the difference: Every phone matches the number of a call to a contact in the address book, and displays the name of the person on the screen. Only the iPhone is smart enough to display “Bob or Betty Newbie” if it happens to match more than one contact. Finally! It gets better, if the last names don’t match it displays “Bob Newbie or Bella Goth.” That Bob Newbie gets around.