The iPhone, the latest uber-hyped creation by Apple comes out this Friday, but the frenzy over this cell phone started when it was announced in early January. Within the last week the hype has exploded, as this miracle of technology is released Friday. People in NYC and San Francisco are already standing in line, over 100 hours before the phone goes on sale. If you are too important or impatient to stand in line yourself, you can always hire iWait to do it for you.

While the iPhone is defiantly a cool gadget, there is one huge problem and reason people initially should avoid it.

When the iPhone is released on Friday, it will only be available on AT&T/Cingular/SBC. As far as technology companies go, AT&T is one of the worst by far for consumers. Gizmodo has a great article discussing the “moral quandary” of purchasing an iPhone through AT&T. Also, those in the Midwest know AT&T has lousy reception in the area, thus making the iPhone just an iPod for most of us.

For those that rank the importance of cool gadgets over doing business with the evil empire, the cost will not be cheap. The phone itself starts at $499 for the 4GB model and costs $599 for the 8GB version. The plans offered by AT&T start at $60/month for a whopping 450 minutes of talk time. Therefore, if you go the cheap route, the cost to own an iPhone is close to $2,000 over the two-year contract. If you are a normal person that uses your phone on a daily basis, the cost of a plan with 1350 minutes is $100/month. Pick up a 8GB iPhone to use with this plan, and you are looking to spend over $3,000 over the course of your contract.

The main thing people seem to be forgetting about the iPhone is that it is a cell phone. Sure, it has iPod capabilities along with an Internet browser, but so do a lot of other phones currently on the market. By the time the holidays roll around, you’ll be able to get similar phones by other major companies that are better and run on all providers for less. Maybe it’s the shiny Apple logo on this cell phone that have people ready to trade in their first born for one, but in the end, it’s a cool phone using a shitty cellular provider, nothing more.

For those that have been living in a cave for the last six months and are not familiar with the iPhone, and all the coolness it has to offer, David Pogue of the NY Times has a great video review (below) of Apple’s new toy. I am a huge Pogue fan, and this is a great review.