Update 01/16/08:
Apple iPhone Software Update announced at MacWorld 2008

It is really happening. Steve Jobs announces the Apple cellphone and it is called iPhone!

In brief: The Apple iPhone is so cool and ahead of any other mobile phone on the market that you need to have one right away!

The Apple iPhone is only 11.6mm thin and features a 3.5 inch screen with a new finger based UI called Multi Touch. It has no keys. It is basically just screen.
The phone syncs music, videos and your other data (contacts, calendar, email,etc.) via iTunes. The iPhone plays of course music and video and has 8GB of storage.
Apple even improved how to make calls with visual voice mail (like email) and simple conferencing. Once you have your contact data synced nicely you do not need the virtual on screen keyboard.
A Safari based web browser is available on the iPhone for surfing. Push email is also available.
Connectivity of the iPhone includes GSM/EDGE, Wi-fi and Bluetooth.
The Apple iPhone is available on Cingular. The 4GB iPhone sells for $499 and the 8GB iPhone for $599. The iPhone ships in June. The iPhone will ship in Europe in Q4 2007.
Photo and info via Engadget.