Smart move!
I love my iphone. Seriously, it's a little sad how much I enjoy having it. I have the 2nd generation 8G, the most basic plan, and pay about 85 bucks a month for it, and it's well worth it. That gets me 500 anytime minutes, 5000 nights & weekends, unlimited internet, and 200 texts a month, plus all minutes are rollover. I've got maybe 2000 rollover minutes accumulated so I never even come close to going over. The only place in Sowal where I have any trouble with reception is in my own apt.

My favorite thing is the visual voicemail. The keyboard is kind of a pain at first, but it does get better.
The camera is basic, but takes really intersting photos. I love how big the screen is for viewing pictures, and I love having my whole photo library with me. My next case will be the Griffin with a macro lens for the camera.
I've just recently started using the ipod feature on it, and I have to say it is pretty great, and convenient. I also got some small speakers, and it is nice to have my portable stereo wherever I want it. I just read about a new app for recording things, so that will come in handy. I like the compass app for hiking in Pt. Washington. The games I've downloaded are fantastic. I love going through all the different apps, they are fun. Safari works great. The mapping feature is awesome, as is having GPS mapping & directions anytime you need them.
I use a macbook at home, and for me the iphone is like having a little mini version of my computer with me. I don't know how well it works with a PC, but synching it with my mac is so easy. The calendar is another feature I use a lot. I always used to carry a dayplanner; now I can put it all in my phone, and sync it to my computer. It's got a "Notes" feature that looks like a yellow legal pad, which I love. I could go on and on... Of course, you can do a lot of this stuff with other phones too, so it really comes down to your tastes and preferences. You should probably go to a few different stores and play with some different phones, see which one stands out for you. It's a lot of money to spend, you want to make sure you'll like it. Being stuck with a phone you hate is the pits.
Major disappointment: charge time. Phone calls and texts dont suck up the juice so much, but the camera really does, and so does surfing the web. I bought a car charger, which definitely helps. If I just use it for phone calls and the occasional facebook check, the battery lasts for a couple days. If I do more, I charge it every night, and sometimes in the car too.
One last thing: this is a must have for anyone who uses their iphone/ipod near water. I use it at the beach and while kayaking, the touch screen works through the plastic, and it is totally watertight...
Waterproof Your iPod With iBagz | ifrogz