No, I'm not entirely crazy. There's no denying that this is a sweet device. The people and markets have spoken and most seem to be in love - or at least in lust - with it. As a device, I think that it's a game changer - but there there are some practical issues I need to get past before I can bring myself to buy one.
First of all, I've been spoiled by the the convergence on my Blackberry. It's been an amazing experience carrying one device for my phone, work e-mail, personal e-mail and Internet access. It's going to take a lot for me to give that up, though the iPhone probably comes close.
Beyond this, there's the issue of Cingular exclusivity. Even with number portability, switching carriers is not a trivial task. I'm sure Apple decided to announce 6 months before the actual release to allow prospective customers to let their contracts expire - I've already heard people at work planning on doing so.
It should be noted that this is a GSM device, so it hurts the CDMA-based Verizon and Sprint but probably doesn't affect T-Mobile as much. That said, even if an unlocked version were available (now that it's legal and all), it could be limited on other networks since Cingular reportedly had to make technical changes to support visual voicemail and other features.
It's also very expensive even by Apple standards, especially for something that isn't a smartphone. Steve's logic that "there is no premium because it's what you would pay for a smartphone and an iPod" is suspect, ignoring the fact that all of those other $299 Smartphone (e.g., the Dash, the Blackjack) play music and video already. Plus, the $599 price tag includes the "discount" for a 2 year contract. I put "discount" in quotes because Cingular has been banned from offering discounts on the iPhone, much like other Apple retailers who are prohibited from putting iPods on sale. Basically, you're paying full retail price and getting locked into a two year contract with Cingular. That "free" Yahoo IMAP push e-mail doesn't feel so free anymore, does it?