If you're not a heavy PDA user and like Apple products then get one, you'll not regret it (aside possibly from the cost).
If you're a heavy PDA user you'll regret it, like many of it's rivals it falls down big time in this area, but then there are not that many options out there in this catagory (this is the camp I sit in).
If you're not bothered by Apple products, but like the iPod Touch, get the latter to replace your MP3 player as it costs a lot less, then get an alternate phone for a lot less money. The iPhone interface is superb, but it's functionality is average, it's phone technology (as opposed to the interface) is dated and not that well implemented, and if you're an audiophile (I'm not) you'll hate the sound quality (actually you'll find the same with all iPods post Gen 3 (or was 4 the last one with a real audio output interface as opposed to a SW one).
I suspect from the way your wrote your question you'll fall in to category A, in which case you'll get the iPhone and be very happy with it.