It's a shame, too, because the iPhone / iPod Touch seems made for doing cool future-y music stuff. I'd personally love to see an app that simply lets you put interface objects like sliders or buttons or X-Y pads on the iPhone screen and link each one to a MIDI control sent over Bluetooth to a host machine running a synthesizer. You could turn the iPhone into a far cheaper (though far smaller) version of the JazzMutant Lemur, using your shiny new phone like a Kaoss Pad or an Akai MPC drum/sample pad. Or you could use the motion sensors to scratch samples, ala Serato or FruityLoops. I even suspect that Apple may soon drop an app that lets you use the iPhone as a virtual mixing board / transport control for GarageBand and Logic like the now-defunct and frankly unlamented iControl. The ability to control Logic remotely from inside my vocal booth (aka my closet) would be enough on its own to make me give up my tasty Nokia futurephone and drop a couple of Benjamins on the iPhone.
I agree with Peter that it's early days yet; it's just a matter of time before you see groups of kids hanging out on the corner with their iPhones making beats in real-time, a high tech version of the guys who hang around in Manhattan making music with plastic buckets.
Heck of an expensive plastic bucket, though.