One of the more unique features in the iPhone is its trio of sensors (orientation, light, and proximity -- the latter two are behind the glass right above the earpiece) which help the device interact with its user and the world at large. Some of these sensors are more useful than others. The light sensor (for dimming the backlight) is great for saving power, but its use doesn't compare to the the other two sensors, which worked like champs. The proximity sensor, which prevents you from accidentally interacting with the screen while the iPhone is pressed against your ear, switches off the display at about 0.75-inches away; the screen switches back on after you pull away about an inch. This very useful automatic process took a little getting used to from us oldschool touchscreen users, who have long since grown accustomed to diligently turning off the screen while on a call, or holding our smartphones to our ear ever so gently.
The orientation sensor also worked well enough. Although you can't turn the phone on its head, when browsing in Safari you can do a 180, jumping quickly from landscape left to landscape right. The iPhone would occasionally find itself confused by the odd angles one sometimes carries and holds devices at, but in general we didn't expect the orientation sensor to work as well as it did.
Despite the iPhone's entirely touchscreen-driven interface, all of its external buttons are mechanical and have a distinct, clicky tactility. There is, of course, the home button on the face, which takes you back to the main menu; along the left side of the unit is the volume up / down rocker (which is clearly identifiable by touch), and a ringer on / off switch -- something we wish all cellphones had, but that far too few actually do. Turning off the ringer briefly vibrates the device to let the user know rings are off; it's worth noting that turning the ringer off doesn't turn off all device audio, so if you hit play on a song in iPod mode, audio will still come out the speaker if you don't have headphones inserted.
On the top of the unit is the SIM tray (each unit comes pre-packaged with an AT&T SIM already inserted), which pops out by depressing an internal switch with a paperclip. Finally, the largest perimeter button is the sleep / wake switch, which does as you'd imagine. Press it (and swipe the screen) to wake up the device, or press it to put it to sleep; hold it (and swipe the screen) down to shut it off completely. (You can also use it turn off the ringer - -one click -- or shunt a call to voicemail -- two clicks -- if someone rings you.)