Should I buy an iPhone?

As Hiptastic mentioned, the OS plays a very big role. Just the ability to use a full computer OS in a small device like the iPhone is a wonder.

The iPhone supposedly uses a CPU recognized as ARM (Advanced Risc Machine). It also has the other main components of a computer such as memory and permanent storage (actually SSD). The OS is capable of treating the hardware as if it were a real desktop or laptop. It can make system calls and respond to interrupts.

The OS is actually a developers build of OSX with a GUI called Onyx. It is not a simple Java or Basic platform. In theory, anything you can potentially do with a home computer you can do with an iPhone. PDA's OS and hardware limit it's capabilities to very specialized, catered environments.