I have an iPod Touch, which is sort of like an iPhone without the phone. (Or, to be up-to-the-minute, like a pocketable iPad.) The great advantage is that it can run iPhone apps, and since there are millions of iPhones out there, that's a lot of capability on a cheaper device. But all those iPhone apps take network connectivity for granted - so if my iPod is out of wifi coverage, many of them don't work right.
For an iPhone app developer, the iPod represents a niche market. There are some apps that iPhone users are likely to need on a plane, so there's an incentive to make them work well offline. Byline, the blog feed reader, is a great example. But most developers don't put a lot of effort into it.
The example that got me thinking about this is wine. I keep track of wines I've liked--and disliked--and what I've got in the house. Cellartracker.com is a great service for this, and there's an iPhone app, cor.kz, that interfaces with it. Cor.kz gives all kinds of other information, like prices and user reviews, that leverage the power of the cloud. But in the proces of providing that extra functionality, they made it too dependent on the Internet. The app won't even start without a network connection. It doesn't bother to store the contents of your cellar on the device.
I can't complain too much. I'm saving $360 a year not having a data plan. But it's not quite the best of all worlds.