I vividly remember when the first iPhone was announced. It required a dongle to use third-party headphones, had no app store, and no 3G in an era when expensive cell phones were equipped with 3G. I just laughed at it, because it was so restricted and restrictive.
Apple, of course, quickly realized they could make piles of money by taking a large cut (30%!) of app developers' revenue from selling iPhone apps. I was looking to replace my old Motorola V325 when the iPhone 3G came out, and it addressed my biggest complaints about the platform, so I ended up getting one. I jailbroke it before too long, mostly because I wanted to customize the appearance of the springboard (home screen). My iPhone 3G is still jailbroken to this day, with a very cute Hello Kitty springboard theme.
I wouldn't recommend any of the more modern iPhones, but that's mostly because I don't recommend Apple products in general.