I know the iPhone is about that huge touch-screen interface, but that's exactly why I am skeptical that iPhone can live up to its hype. I had a touch-screen phone before, and the problem is not that I misses the keys. Instead, the problem is that I miss the feeling of a hardware keyboard.
Remember the mighty mouse? It's a mouse with clicks, and how many people actually buy it? Or imagine a computer keyboard with a touch screen. Even with the most intelligent algorithm that can predict or correct what we type wrong, I don't think people would like it. Human interface design is more of an art than a science. We will see if Apple can replace keys with touch screens.