My observations are based on using the locked-down T-Mobile G1 for the last few weeks.
The default battery situation is terrible. The charge will last all day, if you don't use it much as a computer. But then again, that's the point and fun of having this thing. It's OK for your computer to run out of charge, but it stinks that your phone is dead too. The higher capacity batteries probably help some, but the external power pack is the way to go. It holds about 3-phone charges worth of juice, and is pretty small.
Attachment handling. There's a beta PDF reader (that expires), and no MS-Doc viewer. Viewing ability for these documents seems indispensable for a smart phone. Also, you can't attach files to emails (only certain types, like photos). Plus, file uploads are disabled in the web browser (Are uploads and attachments limited on the unlocked Dev?)
The telephone and SMS aren't tied together as neatly as they should be, nor are the emails and contact systems.
You can get a shell, but you don't seem to have permission to do a whole lot. It seems to be real Linux, although I'll defer to those with unlocked root access! It's nice to have a VNC viewer, although for that and the shell I haven't figured out how to generate certain vital keystrokes, like control keys and arrows. A precompiled, easy-to-install VNC server would be a nice thing to have as well.
The GPS is extremely finicky. It often fails to establish a location, or takes a long time to do so.
The camera can be very slow and hard to focus, and there's no zoom or control over it.
There's supposedly a software update coming out very soon ("cupcake") that will add an on-screen keyboard, and generally make things better. Despite my complaints, it's really a cool phone, and I think it will get better over time.
Whether this phone is great or not, it portends well for even better devices to come. I think smart phones will become the realization of the Tricorder from Star Trek....