You're coming at this the wrong way
People make the same mistake with iPod. It's an understandable one, but a mistake nonetheless.
You say existing products do more for less, they just don't have as much style. Well, yeah. But you don't get it. That doesn't matter.
It's like with iPod, everyone goes on about how X competing player has a radio. It's an irrelevance. iPod and iPhone excel at the things which matter to a lot of people nowadays. Style and ease of use.
You can argue until your faces turn blue that the N96 has more features, or that an internet phone with no 3G support is pointless, but it's an irrelevance. You're applying ideas which worked when Windows One came out to a completely different and far more modern situation.
Windows beat Mac OS because it was good enough - it worked for all the things people wanted. Things have changed and what people want has changed. iPhone and iPod offer what people want and that's good enough for them. It's simple. No need to go and look at all these complex competitors with their multitude of useless features (We're talking about standard users, remember).
So yes - iPhone is too pricey, is missing a few features, ought to have better guts - but the fact of the matter is. None of it matters. If it doesn't do what you need, ignore it. Go. Buy a phone that does and leave those who are satisfied with iPhone as is in peace.