The idea of it sounds interesting to me. Not necessarily as a "phone" though, but more of an iPad replacement.
The problems for me:
1. It runs android. While I hope that MSFT will support it into the future, I fear if it flops that the dual screen setup and support is going to dwindle over time.
2. No pen slot. This is a huge fail IMO - one of the main ways I would want to use this is as a small digital notebook. Having to carry a surface pen separately kind of sucks.
3. No external display. I know they are already pushing it price wise, but even just a small OLED strip would suffice, to let you see a notification without having to unfold the device to see what it is. Missing this makes me think this will be a terrible phone - to know who is calling you now have to take it out of your pocket, open it, then choose what to do.
The problem is I think the $400 iPad Mini likely outclasses this device in terms of software and performance.