I'm using the Android Developer Phone (ADP), which replaces my Sony Ericsson M600i. Never use the iPhone, so unable to do a comparision. However, compared to the M600i and WM5 device before that, it has a very nice Webkit-based browser with Javascript support. The Half-VGA screen provides more real estate for display and combined with the trackball which allows you to scroll from part of a page to another both vertically and horizontally, provides a pretty good browsing experience.
The keyboard is pretty good as well once you get used to it. I have my email hosted with google, so the synchronization provided by Android was a plus, though somewhat disappointing because the native gmail apps was kind of restrictive compared to accessing gmail mobile using the webkit browser.
As mentioned by david, there are other bits and pieces that could be improved for a better user experience, but overall, I did rate it pretty awesome as it is.