That reaction really only came from makers of competing phones. (RIM execs famously refused to believe the battery life was possible, Balmer threw very unconvincing dismissals.)
Everyone else was standing in line to buy one.
I remember thinking (and hearing):
'Way too expensive'
'I want a tactile keyboard'
'Nice, but I don't need one'
and so on.
However, the overwhelming response to the iPhone was extremely positive. Even from non Apple sources.
RIM didn’t think the iPhone was possible when it was first released. Google instantly changed the direction of their Android project when the iPhone was released.
Maybe also complaints about bad autocompletion?
Qwerty keyboards were always a niche, and "nice, but I don't need one" is reasonably classified as an underestimate of the product but it's still approval.
The iPhone 3G changed this fundamentally; you didn't have to be a die-hard Apple fanboy to justify wanting one of those, because it was the only phone on the market that actually gave you sufficiently usable mobile access to "the real Internet".