I had my doubts too, until the minute I used one at the Apple store. I walked out with it, $599 poorer.
I know I got more than two years of use out of my iPhone 1 and then passed it on to my 2 year old daughter who used it for over a year. Well worth the investment and for all the little gripes or complaints I did have I still feel like I got more than I paid (including phone cost + carrier fees).