There is no AT&T phone on Earth in the year 2008 anywhere near the iPhone. The camera only matters if you are a photobug. When it comes to the web, iPhone, every other thing is relative and nuanced.
So hard drive space, MicroSd cards and all that other crap only matters if you really need it. But if all you do now is talk on your phone, text on your phone and check email and web. iPhone without a doubt.
Be sure to get the 16GB (14.8 usable). Being able to pull up the "real" web at any given moment anywhere is a banger. The only drawbacks are no Flash, so if you use ESPN and watch tv shows on the official sites or MSNBC video you'll be a bit pissed.
Also Youtube does not have every video that is on the regular YouTube, but shopping, price comparing on the spot and getting new places to eat and Google maps with directions are like daily habits for us.