Many people like iPhone. But I think iPod touch is a better buy. With iPhone, you have to pay $399 for the phone, at least $59 per month for the data plan with two years contracts. That is $20 more than regular phone plan. So the total two year contract with iPhone you have to pay 20x24+399=$879. Many people complain that the Edge data plan is very slow. Plus when you use WiFi outside, the WiFi uses a lot of battery power. You phone might run out of battery and was not able to make phone calls. Ipod touch has most of iPhone features except phone, camera, Bluetooth, speaker etc.
more about iPod touch here and a video show from MacWorld: Ipod touch
and how to convert DVD to iPod video here