It also means the iPhone's potential as an amazing computing and communication platform will never be realized. And because of this I don't think the iPhone will be as revolutionary as it could be. That's a real heart breaker.
Steve Jobs initially sold the iPhone as the Next Big Thing from Apple, just like the Macintosh was. The Macintosh really broke the mold. While not as groundbreaking, the iPhone is an intelligent and clean implementation of existing things. Really intelligent, really clean, like the Mac. Unlike the original Mac, however, developers won't have full access to its core features. Without them there won't be the equivalent of PageMaker, Photoshop, Word or Premiere in the iPhone, powerful applications taking full advantage of the unique capabilities of the hardware, the operating system and its frameworks.
Those applications spawned two revolutions: desktop publishing (including photo editing) and desktop video. It was the Mac and its third-party apps that brought radical changes that have deeply affected us, not the Mac alone.
On the iPhone, however, developers will be limited to developing Web applications based on AJAX, a set of Internet standards that make software like GMail, Google Maps or FaceBook possible. The iPhone is the real thing, a complete UNIX-to-go with stunning graphic classes, and developers will be limited to do stuff like this.