I just retired my Treo 650 (rendered unusable as a phone by my one-year old getting hold of it and drooling cracker crumbs into the microphone) in favor of this phone.
Now that the price point is right, the apps store is available (and vastly better than the myriad of competing poorly run stores for the Treo) and it's got upgraded hardware, it's a no brainer. For the first time in four years, I'm carrying just one item around. (I also retired my iPod Touch.)
The built-in keyboard isn't as good as the physical keyboard on the Treo, but yeah, the built-in dictionary is surprisingly smart. Now that I (mostly) trust it, my typing speed has picked up considerably, although I doubt it'll ever be as fast as I was with the Treo (I've owned Treos for years now).
It's also worth noting that, while Blackberries and Treos do a lot of the same stuff (and iPhone 3G does indeed have secure e-mail like a Blackberry), the software is vastly better designed on the iPhone. Long chains of e-mail conversations on my Treo were just painful; the other night I was e-mailing back and forth to a friend in Chicago for an hour while watching the kid and it was a pleasant experience. Texting is closer to how the Treo did it, but the Treo was quite good at it all along.
I haven't used the camera yet, because I've got a young kid, and my wife is never without a dedicated (and very nice) camera that outstrips any camera available on any US cell phone.
The Apps Store also can't be understated: It's the best in breed, by far. There are great games (and better ones coming -- a version of Star Wars: The Force Unleashed will be on the iPhone in September and iD is apparently prepping a port of something), solid applications for business, communication and more. You can even stream Pandora or AOL Radio through your iPhone while driving around town, which is awesome.
I didn't understand the question about podcasts or audiobooks, but I use both on iPods and now the iPhone, and I can clarify if there's still an outstanding question there.