Items the iPhone has replaced
Cell Phone – This one is a no brainer.  It is after all supposed to be a cell phone.
iPod -  Like many I used to carry around both a classic iPod and a Cell Phone.
Watch – This one snuck up on me.  About a year ago, my watch broke and I needed to replace it.  As I am pretty particular about my watches for some reason, it was taking a long time for me to find a replacement.  In the mean time I was using the iPhone as a time keeper.  After a while I noticed that I liked not looking at my watch all the time to see what time it was.  Instead, I would keep doing what I was doing and when I really needed to know the time, I would pull the iPhone out.  About four months ago, I decided I did not need to replace my watch.  I have not looked back since.

Alarm Clock – Since most of the time the iPhone was the last thing I checked at night and the first thing I used in the morning, I decided to put a charger by my bed.  That way every night I could recharge the iphone.  Since it was their and I like the sounds on my phone better then my bedside alarm clock, I started using my iPhone as my alarm clock.  It is really nice to have multiple alarms set up on a schedule.  No more forgetting to set the alarm or change the time.  Now when I travel I use it instead of a wake up call and my wife still has the bedside clock to use at home.

Casual Web Surfing Device – When I just wanted to surf the web, I would pull out the MacBook Pro, stretch the power cable across the room and sit on the couch to watch TV and surf the web.  Now all I have to do is reach in my pocket and start surfing.  If I am doing work or have a lot of hardcore internet to do, I still go for the MacBook Pro, but I find that I am using the iPhone more and more.

Pocket Camera – With the new 3GS I find that a majority of my picture taking needs are filled with the iPhone.  I still have the DSLR  for photography, but snapshots are covered by the iPhone.  As they say the best camera is the camera you have with you, so now I always have a camera with me.

Pocket Video Camera – When our second son was born about a year ago, we bought a Flip Video Camera.  We loved the fact that it was small and simple, which meant it would be used.  It was to some extent, but we still had to have it with us.  No with video on the 3GS we have video with us all the time.  Yet another device that does not have to be charged and carried around with us.

Ways it has improved what I do:
Weather – When you think about it, it is amazing how often we ask or wonder what the weather is going to be like.  I find that I use a weather app on the iPhone at least once a day.   I love having a weather radar in my pocket all the time.

Started to use Twitter - Twitter never made since to me, but I find having a twitter client on my iPhone causes me to use it more and as a result get more out of it.

Email all the time – This may be a bad thing, but you do have access to email all the time.  The Jury is still out on if this is good or bad.

Low cost app fix – I am a Mac junky and I find myself at times needing to buy something new for a quick fix for my problem.  With the iTunes App store life has gotten a lot cheaper for me.  Now when I need to scratch that itch, most of the time I can find an iPhone app for free or about a buck.  It’s great.
EBook Reader – This is a big thing for me.  I love books and I will take them any way I can get them.  I love the fact that I can preview a book and then if I like it I can buy it and have it on my iPhone in a matter of minutes.  I also find that I can read a book on the iPhone in bed and not bother my wife with lights on in the bedroom.

Time Waster – I have never been a big game player because I found it just a waste of time.  But that was because you had to be deliberate with it, by setting down at a computer and do it.  With the iPhone if I am standing in line or if I have a few minutes to wait for some reason, I can pull out the iPhone and play a quick game, read a chapter, check on the weather or the news, or read a blog.

There is a lot more to the list, such as Google Maps, GPS, GeoCaching, and many more that I just don’t have time to write about.  So looking at all this a feel a lot better about what it costs.  Don’t get me wrong, I think ATT is getting away with robbery, but what I get with the iPhone makes it a litter easier to take.

Here are my most used apps:
Accuweather
Things
Fring
Google Reader
Tweetie
Evernote
GeoCaching
Camera
Mail
Kindle for iPhone
App Store
iDisk
Google Maps