I've never used an iPhone, so I can't really offer you an iPhone / Nexus comparison (though there's plenty around online). What I do really like about the phone (and I have no idea of the iPhone can do this too) is that...
- You can buy MP3s directly from the handset (note - MP3s, not Apple DRM-loaded files that won't play on a non-Apple device)
- You can set it up to automatically download new podcasts to the handset
- Search functionality is great - you can search your text messages & emails at the same time.
- Google Goggles (OK, so maybe a bit gimicky, but very cool) - you can take a photo of a book / CD, and it will tell you what it is, with a link to buy it (and it actually works), you can take a photo of a painting in an art gallery and it will give you more info, or a photo of a shop and it will give you its website / phone number etc. If you have GPS on and point it down a street, it will try and pre-emptively label shops, again with links through to the website / phone number
- Speak-to-search - surprisingly, it works. Well.
- Seamless Gmail/Facebook integration into your contacts list (if you want).
- Fully customisable desktop where you can add direct-dial shortcuts, links to favourite apps, widgets (for example, Tube status, clock, one-click power management etc)
- Multi tasking
Music player is fine, you can scroll through artists / albums / songs or do a search. Shuffle / playlists are supported too. Not sure what more you could want. Haven't had any need to run to support but I could potentially see it being a problem. What is neat is that if you have a warranty issue, you don't send your phone away - you get sent a new phone, and you have to return the broken one once you've got the new phone.
I would agree that it perhaps feels little unfinished in places - one of the active wallpapers crashes, for example - and I think it's fair to say that perhaps the attention to detail that you get with Apple products isn't quite there. But it is overall a solid OS. Remember all of the problems the iPhone had when it launched - no MMS, no video, no copy&paste, etc etc.
I would say that if you want an Android phone, this is definitely the one to go for - because it's plain Android, without the layers added on top by some phone manufacturers, it's easy to upgrade and therefore pretty safe to assume you'll get future upgrades - particularly as it has the power under the bonnet that would be needed to run these.
Compared to the iPhone, it's about the same in price to a 3GS - you're looking at about £450 to but an N1, including import duties, so at a £20 / mo simplicity contract, over 18 months, it works out at about the same, but you have the added flexibility of being able to move network.
It's insured under my home contents insurance.
To be honest - I love the phone, but I was really against getting an iPhone - I didn't want to have to use all of Apple's proprietary software, have a locked down apps marketplace, or have my music tied into Apple's DRM. Not to mention everyone else has one already