Sounds like fun. More details to come.
EDIT: It has a 3.5 inch touchscreen and is running Mac OS X!
EDIT 2: 11mm thick, 2 megapixel camera, Quad-band GSM + EDGE GSM
EDIT 3: light sensor for adjusting the backlight automatically, accelerometer to change between portrait and landscape.
EDIT 4: Special interface designed for it that ignores unintended stylus and finger gestures. Can lock and unlock the unit by sliding your finger across the bottom.
EDIT 5: Can sync with iTunes, iCal, AddressBook, etc, on your Mac (probably PC too). Simple to use Conference Calling built-in
EDIT 6: Has SMS client has some iChat features, Photo Manager has some iPhoto features, Safari web browser, email client with Exchange, POP, IMAP and push Yahoo! Mail support, Google Maps, Dashboard Widgets
Edit 7: Has Wifi
Edit 8: can directly dial a phone number emailed to you by simply touching it like the Treo.
Edit 9: Can have multiple browser windows open but only the focused one is full sized the rest are minimized to an icon.
Edit 10: Yahoo! is porting their OneSearch service to the iPhone.
Edit 11: Price $499 for 4GB and $599 for 8GB with a 2 year contract.
Edit 12: Available June 2007 from Cingular only
Edit 13: That's it for now. I'll try to dig some more detailed specs and the Pics from the link that Srono posted give you a pretty good idea what it looks like.