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Yes, iPhones are definitely phones. It's in the name. But an iPhone has a lot more functions than a regular phone does. Imagine an iPod Touch with a phone, messaging and picture messaging. There is also a fully functional compass and voice memos. I find the two slightly unnecessary to use on a phone, but their great if you get lost and you can use the voice memos for work. There's better sound than on the iPod Touch and there is voice control if you hold down the "Home" button for about two seconds. There is a camera as well as you can add several apps (some are free, and some you have to pay for).
On the "desktop" you can also check the weather for today, tomorrow and a week from now, keep up with your stocks, access YouTube and there is a Map so you can navigate yourself to places you don't know where are (there's a function where you type in the address you are at and where you want to go and it shows you the way - either walking or by car). There is also a calculator, iTunes and a link to the App Store.
You can also send mail through several different mailing sites (Hotmail is sadly not included, but Gmail is there among others).
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