Last night I solved the syncing problem that had limited Kathleen's ability to use her Treo 650 with her new MacBook. I owe a lot of credit to the book Switching to the Mac: The Missing Manual, Tiger Edition, which explained the details of the interaction between Palm Desktop for the Mac OS and iSync.
During the process of getting the Treo and the MacBook talking, I got another chance to play with ePocrates-- the medical software designed for PalmOS and Windows Mobile PDAs. ePocrates is a great set of vertical market software and services. ePocrates Rx makes my wife's job (as a pediatrician) lot easier. The key feature of it is dosing recommendations and drug interactions on over 3,000 commonly prescribed drugs.
These reference materials really need to be at a physician's fingertips when they move between exam rooms. There is a huge value to having this information physically stored on the PDA in hand. No doctor wants to slow the visit down to look up drug information via the wireless web.
This was the big reason why I said "no" when someone at work asked me, "Is your wife going to get an iPhone like yours?"
Just like I don't need a large quantity of reference information permanently stored on my iPhone, she doesn't need a high fidelity web experience in her pocket in order to do her job. At one time we had "his and hers" Treos, and everyone thought this was cute. However, now our needs are best met by two different devices.
I'm sure that there are other vertical markets where an iPhone SDK and locally-installed software will be needed before there is significant iPhone penetration. However, I think medicine is one of the biggest ones.