Overhyped, I dunno.
The iPhone in implementation is significantly different from any existing phones... and not just because it has an Apple logo on it.
Geeks compare devices as if they are just a list of features. Average people are more concerned with being able to actually use the features they want without having to read a manual, or stuggle to find it in a poorly designed interface.
As with many things Apple does, the iPhone is combination of invovation, but more importantly, implementing specific features in a way which frankly just makes life easier.
Plus they take pride in developing products which both look good, and are fun to use.