The iPhone is slick and sexy, but I find it very difficult to use and I'm appalled by the fact that Apple has complete control over what applications I can install on my phone. Plus, I hate iTunes and would rather not have to use it for anything.
By contrast, the Android-powered G1 has a real keyboard (which I consider mandatory) and a much more open app development policy. Having Google involved makes me nervous, since I don't trust them as far as I could throw a Segway, but other than that the G1 looks like my kind of product. They seemed to have focused on usability rather than beauty.