Over in Europe, high-speed 3G UMTS/HSDPA networks are more evolved than in the U.S. A greater percentage of handsets are 3G-capable, and the network operators offer many services that would be impossible without 3G. So, lack of 3G is a major detractor for Europeans, who are used to high-speed mobile services.
The keypad issue is more important that I previously thought, as well. For the European audience, sending SMS messages is probably a more important feature than voice quality. Granted, the user interface may take advantage of what Apple calls "high technology", but usability is key. The demonstrations on Apple's Web site try to show that sending emails and text messages is easy. I need to see real-life demonstrations to believe that using the touchscreen interface (which provides no tactile feedback) will be as easy to use. Many people send SMS messages without looking at their phones. The touchscreen interface will inhibit that ability.
So, what is Apple going to do? Will we see a 3G version of the iPhone sometime next fall, or ever? Will the UI live up to Apple's claims? Will it launch in Europe with 3G before the U.S.? Even if the iPhone is successful in the U.S. (which obviously has yet to be determined), it faces greater challenges in other markets.