iPod / PMP (Apple, Microsoft, Creative) Camera (Cannon, Nokia, Sony, etc) GPS unit (Garmin, Tom Tom, etc) Phone (cheap flip phone) Gaming device (PSP, DS)
There are exceptions of course -- and workarounds/hacks to circumvent protection (just like Jailbreaking on the iPhone) but more or less these sorts of closed appliance like devices are quite popular on their own. Apple simply combined them into one physical device and kept the same rules.
Apple doesn't sell the iPhone as a general purpose computer so any consumer who buys one expecting it to function that way probably bought the wrong product. I can understand why someone might want that option but it doesn't change the fact that Apple does not sell a product that fits those needs and, based on the success of stand alone devices sold in the same fashion, it is almost completely irrelevant in real world sales or usage for most people. There is of course jailbreaking -- there's also Linux on iPhone hardware. I'm not sure how much progress they've made but I seem to recall they at least had a booting kernel a while back.
No.
"I don't like it" and "wrong" are not interchangeable.
1) No native IMAP support 2) No native Exchange support without a BES 3) Horrific attachment viewer. 4) No real-time spellcheck 5) No auto-correction 6) No easy way to sync contacts/calendars over the air 7) No (minimal?) HTML e-mail support (unfortunately sometimes it does help make long e-mail chains more readable) 8) Gotta rely on your carrier for push e-mail -- or in the case of Sprint "Oh yeah we'll send it if we get a chance. Give us like 20 minutes K?" e-mail service. 9) No intuitive way of deleting lots of e-mail messages that don't happen to all be sequential to each other in the list. 10) No folders -- just one big flat mailbox. Hard to save messages on your phone this way. Again, fixed if you have a BES but I don't want my $200 SmartPhone to require $2k-$5k in hardware/software to be functional.
It certainly gets the job done for the basics but once you get used to having more options and flexibility it's hard to go back.
I tend to take it as a given, considering that the iPhone is essentially a miniature computer and the past decade or so has thrived on customizable, hackable personal computers.
Apple has always wanted to assert extra control on the products they ship. With Mac's, they've controlled the hardware. Now they're trying to control the software. Imagine a version of OS X where every application had to be approved. Does that not strike you as horribly wrong? I wouldn't want to use an operating system with those restrictions, though I imagine the best response to such an OS would be to not purchase it.