Very true, however in some ways iPhone is actually behind. it isnt a 3G phone, only has a 2 mp camera (a huge selling point in this region it seems) and is huge in size.
The new Sony Ericsson K850 was JUST released today by Axiom. at AED 2299 it is (to me, and most) a better phone than the iPhone, sporting all the bells and whistles, internet, wifi (I know the N95 has this, Im pretty sure the new K850 does as well) a solid OS (unlike Nokia's n series) and a 5 mp camera.
In that league, you have the K850 and the Nokia N95. sadly, I dont think the iPhone can stand it's ground in this region against such phones.