Want to throw in some examples, just for the hell of it? What can the iPhone do that the Droid can't?
As I said, look at the app store. The number of apps that the iPhone has access to adds ridiculous amounts of functionality to the device. There are so many different apps, and each turns the iPhone into a functioning version of a different device. Hell, there are apps out there that allow iPhone to become remotes for cars! So the better question is what can the droid do that the iPhone cant? They may be similar in OS and hardware...but the SOFTWARE is what give iPhone its functionality. And there is TONS more software available for the iPhone OS.
You're clearly just going to get iPhone biased opinions on here. If you want Darwin OS, pick iPhone, if you want Android, get Droid. I have both an iPhone and G1 and I couldn't tell you which one is better. It's your decision so just pick one you wont be dissapointed with either. Android is newer and developing fast, also google is way more open to developement than Apple is, mind you, the iPhone is amazing and the App Store is miles ahead of the Android Market, for now.
Tbh. This is a bad place to ask the iPhone v other phone on this site. Everyone will say iPhone. What ever carrier you on stick with it.
Do what I did and get a Driod with a iPod Touch, root the driod to enable wifi tethering with the touch and you've got the best of both worlds.
Go with the DROID!!!....the iphone is WAY overrated.....plus the 3gs has horrible battery life AND verizon has more 3g coverage than att...