here is a quick account of the drawbacks:
1. doesnt have high quality camera
2. does not have video recording
3. does not even have audio recording
4. does not support 3g
5. does not support data transfer over bluetooth (bluetooth can only be used for a wireless headset)
6. does not stream music over bluetooth
7. without jailbreaking the phone, you will have VERY LIMITED applications.
8. its expensive
that said, i bought an iphone in pakistan for 40k ($650 approx), and i still think it's worth every penny. read up on other forums, particularly www.modmyiphone.com, to learn how to jailbreak. once you get that part, you can install applications for pretty much anything. video recording, sound recording, changing themes, ring tones, GUI, and awesome games that incorporate the accelerometer. the multi-touch interface is very intuitive to use and once you get used to the keyboard, you can type emails, sms etc just as fast as you can on your computer.
all other similar phones, the samsung armani, the LG prada, etc, dont even compare in terms of functionality. anyway, enough said. i'm sure other people will have more opinions to offer. i recommend you go to iphone related forums and read up on whether the phone suits you or not.