First, a caveat... I plopped in my AT&T SIM card into the N1 before turning it on. That worked just fine -- with some known limitations. By working just fine, I mean that the N1 recognized the SIM card and configured itself for AT&T's APN without me doing anything. This was not the case with the ADP1, which was actually a pain to get working initially. You see, every Android phone that I have used wants you to sign in to Google before doing anything else. This can be a real problem if it cannot use the SIM card to access a data network. Anyways, it was no problem at all for the N1. However, as Google has pointed out, the N1 is not able to access AT&T's 3G network. It does not have the right radio for this. I have no idea why this is the case, but I will say this. Let's just imagine that I loved the N1 so much, that I decided that I wanted it to be my everyday phone instead of my iPhone. Even if that was the case, there is no way I would do this, since I would have to switch service to T-Mobile in order to access a 3G network on the G1, and for me (as well as most iPhone users) that would meaning breaking my contract with AT&T. On the other hand, if Google/HTC had only put the right radio in the N1, so that it could access AT&T's 3G network, then that would not be an issue. I bring all of this up now, because it does make it more difficult to compare the two phones. If you have one phone that is on 3G and another on Edge, you will prefer the 3G one unless the Edge phone is just way better in every other way.
Ok, so the good news is that the N1 is definitely a phone that I could live with. It is fast, I mean really fast. Navigating between applications, applications execution, startup, etc. are all very fast on this phone. I would say it is noticeably faster than my iPhone 3GS. In fact, I did some mini-benchmarking between the eBay Mobile app for the iPhone and our new eBay Mobile app for Android, running on the 3GS and N1 respectively. I put both phones on the same Wi-Fi network for this test. The N1 app was definitely faster than the 3GS app. Now the code is different, as our Android app takes advantage of some the Android features to speed up some common things in the app. Still, the Android app is running in an interpreted environment, the Dalvik VM, not as native code like the iPhone app. So even though it was definitely an apples to oranges comparison, I still found it relevant. Our app on the ADP1 (Android 1.6) was much slower.
The phone is also aesthetically pleasing. It is a pleasure to use. It looks nice. It is incredibly thin. In fact, the iPhone feels very chunky in my hand, after using the N1. Using the phone was very intuitive, but of course I have been using Android phones for over a year now, so I am certainly used to the OS. As a phone, it is on par with the 3GS, which is to say it is ok, nothing to brag about. The soft keyboard is easy to use for me, probably because I am used to using an iPhone. The word suggestions on Android are really nice, and it took me no time to start using them aggressively, thus saving myself a lot of typing.
My favorite part about the phone is the email. We use MS Exchange at work, and I am a long time GMail user for my personal email. With the N1, I could setup both to be in a push mode. On my iPhone, I can only setup one or the other to be in push. So on my iPhone, I have to check my mail to know if I have new GMail, but I immediately know about it on the N1. Also, I think email for both of my accounts looks better on the N1.
However, this brings me to a negative for the N1. It will connect to our MS Exchange server with no problems and can sync both email and contacts from Exchange, but not calendar. I have been told that this should be possible, but all solutions I have seen involved either 3rd party software, or using a workaround like syncing my Exchange calendar to a Google calendar first, and then syncing the Google calendar to the N1. I don't want workarounds, I just want something that works easily, so this is a huge negative for me. When I am at work, I often go from one meeting to another, and it is invaluable for me to be able to look at my phone to know when/where my next meeting is.
Speaking of apps, the Android Market is growing rapidly. The Facebook app for Android is very nice, and its use of the OS to allow you to integrate your friends list with your address book on the N1 is excellent. There are a lot of Twitter apps for the N1, I personally liked Swift. There are a lot of other quality apps out there as well. Here is a handy equivalency table of apps between iPhone/Android from Alex Payne. Still, this is definitely an area where the iPhone has a huge advantage. For me, the advantage is most pronounced for games. There are so many more games on the iPhone, with more well known titles (often backed by big companies like EA.) Also, the games seem to be much higher quality. The number/quality of titles will likely improve over time. Hopefully the quality of the games will too. Perhaps this is an area where the Dalvik VM gets in the way, though you can certainly go native for games, potentially reusing code developed for the iPhone.
A couple of more things, both good and bad... The browser on the N1 is excellent, definitely on par with the iPhone's. That is both from a user perspective and a developer perspective. Having multi-touch in the browser makes a huge difference for users. Adopting HTML 5 standards makes a big difference for developers. I never saw any pages that rendered noticeably differently on the N1 than they did on my 3GS. Usually it was the same only faster. Overall the browser, like most other things, tend to look better on the N1 than the 3GS simply because the screen is so much better... On the downside, the camera was a little more inconsistent for me on the N1. There have been times where I took pictures on it that came out completely out of focus. They certainly did not look out of focus when I took the picture. Maybe this is bad luck. The N1 has a 5MP camera, but I would not say that rates it above the 3GS. Don't get fooled the megapixel myth. I think pictures on both cameras were of similar quality -- except when the N1 would get things out of focus. The flash on the N1 seems useful however.
So there it is. If I lost both of my phones and AT&T cancelled my contract, it would actually be a tough decision between the 3GS and the N1. I would go with the 3GS because of the calendar issue and its big advantage in number of apps/games available for it. The calendar issue seems like an easy issue to address, and the apps/games discrepancy is become less pronounced. It's not like the Android Market needs to have parity with the App Store, at least not in terms of quantity. Also my issues are far from universal. So I could definitely see a lot of people picking the N1 over the 3GS.