Though most of the stock apps on it don't work anymore, it's fine as an actual telephone, address book, very basic camera, and a few other things. A lot of the apps on it are no longer available, and since the App Store app is so slow as to be unusable, they don't get removed.
Safari works, but most sites look like they've had their CSS disabled. So it's kind of like WAP days.
It's a good phone for banging around with in uncertain areas, or where you need a phone that you don't mind getting wrecked.
In my opinion, the form factor is still unsurpassed. And it feels good in the hand -- weighty and assuring, but small enough to not get in the way.
The thing I use it for most, though, is the music player. Somehow it sounds better than the newer iPhones. But then, I also think the Shuffles sound better than the newer iPhones.
It's not free, which I understand, but it's also not nearly as likely to be immediately exploited by some of the various problems older phones have had (SMS hacks, browser exploit hacks, etc).
The security problems would trump most other considerations for my for a modern era smartphone of that vintage.