I'm not sure what you're expecting. Have you taken a look at the Palm / WinMo market? It's worse. There's tons of games that are awesomely fun on the iPhone - Hero of Sparta, Brothers in Arms, Fastlane, 7 Cities, SlotZ, Real Soccer 09, Lights Off, Wurdle - damn, I could go on. Check out
www.toucharcade.com for reviews and such.
As for apps, what exactly are you looking for? Sportacular is insanely awesome, Manifesto is good for RSS feeds, Stanza is an ebook reader that is flexible and there's a site (
www.drinkmalk.com) that has a large amount of current day books if you already own them that you can download, Wikiamo for wikipedia, Google Earth, YPMobile, Photogene, fring, Snaptell, iTap ... you need to thread through the crap and find what exactly you're looking for. Pay attention to some iPhone sites that have people posting constantly about the newer stuff and giving reviews (modmyi.com, macrumors iphone forum).