iPhone is a big step backwards for mobile computing. Why? Because its App Store moves functionality away from the browser and into individual applications that only work on one platform. Most of the apps I've seen could instead just be well designed webpages which would not only work on the iPhone, but also on Symbian, WM, Android, WebOS and BB as well as on many featurephones. Rejection of Flash, Java and Python further serves to reinforce this. As a result, content providers are forced to abandon or poorly-serve other platforms as the App Store rather than a search engine is the place to go for information; websites will be punished for having an excellent website.
It's bad news for competition which, in the long-run, is generally bad news for consumers.