Being a reasonably happy iPhone owner, I can probably give a little insight on that phone. I think it is pretty great as a consumer device, for everything but actual phone calls. I switched to AT&T from verizon and have been not too impressed with their coverage (DC area). Its not terrible, but definitely worse than verizon. Secondly, I'd been having some connection issues with calls, but Apple just released a new Firmware and it seems to have helped it.
The UI of the iPhone is excellent. Probably its top selling point. Very easy and enjoyable to use IMO. Also the App store is very easy to get applications from with many being free ( I have like 20 free apps right now). I can't comment on G1's app setup, but I've heard its not quite as simple to use as the iphone's.
As for Turn-by-Turn directions, that might be coming in the future, but right now, the best your going to do is click through directions, which I find pretty useful, but isn't super when driving by yourself.
I'm not sure how great the iPhone is for using as a business phone, as I don't have it hooked up to my work email/calander via MS exchange, but I've heard it isn't perfect. Blackberry probably has this area down the best.
Final comment to a long post, I'd recommend the iPhone and have been really happy with mine, but it does have its negatives. However, Apple has been pretty good about updating its Firmware and fixing many of its bugs, as well as adding new features (like mass transit directions to google maps last week...very nice). So you are buying a 2nd gen product that is pretty well supported.