Lack of GPS on the phone might not be that bad. Apple seems to be betting that WiFi is going to become more and more pervasive and as a result you can uses "GPS-Style" services through the internet, like Google Maps.
It's something I think a lot of currently generation Mobile services (i.e. Loopt) should strongly consider.
However, I'm a huge sucker for Apple and Apple marketing. And, the touchscreen/OS/UI look brilliant. But, for $500 with a 2 year and the required data plans, I'm not sure. I am a dirt poor college student, after all.
Palm is coming out with a new one later this year with wifi, 3g, and GPS.