Cann's iChat for iPhone service, as it's called, is also fairly limited in functionality, at least for now; this definitely isn't your Mac's iChat. Right now there are no groups, no buddy icons and opening more than 4 chats apparently is not recommended. Usage is also limited to only 10 minutes per session also, probably to help Cann sleep at night while he's tinkering with polishing this.
Still, if at least some form of iChat is strongly desired or simply a necessity for some iPhone users, this iChat for iPhone could overcome the hurdle for at least a few potential customers. Of course, we're all expecting Apple to provide a more serious solution at some point, but as with so many other Apple-related offerings, we'll just have to play the waiting game.