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Safari is where iPhone shines. Based on the same WebKit rendering engine as Safari for Mac and Windows, it rendered every web page we tried flawlessly. We were simply stunned at how good pages look, and how very readable they are. Even heavily designed sites such as Ars Technica and the Wall Street Journal work well. (It even worked fine with the Journal's "rollover" menus.)
iPhone's zoom gestures are the key to making the Web usable. Simply double-tap the area of the page you're interested in, and Safari zooms in to that area, intelligently enlarging it to just the right size to read on iPhone's screen. iPhone's novel "pinch" and "stretch" gestures work smoothly, and flicking a web page around is remarkably easy. In a single weekend's use, we've already come to prefer it to scrollbars. (In fact, when using a PowerBook, the author keeps trying to flick web pages and emails up and down!)
If you want more width for reading, just turn the phone on its side. Safari rotates and resizes the web page content to fit.
Safari is where you will most notice the speed of the network; we did some basic testing with DSLreport.com's Mobile Speedtest. On WiFi networks, we got around 800-1000 Kbit/sec on a DSL line, and somewhat better on higher bandwidth cable modems. On the EDGE network, we usually got 140 to 160 Kbit/sec, though we sometimes saw lower speeds and sometimes saw as much as 190. That translates to 17 to 20 KByte/sec; the MacInTouch home page takes five to six seconds to load at this speed.
iPhone switches between WiFi and EDGE seamlessly, preferring WiFi where available. We even found we could turn off WiFi while loading a large web page, and iPhone switched to EDGE and kept loading.
Safari does not support Flash, Java, or even QuickTime plug-ins. Oddly, there is a setting to disable plug-ins, but we don't know what those plug-ins might be! Safari is an excellent client for Ajax applications such as Gmail that pay careful attention to platform independence, but we couldn't use Apple's own .Mac webmail to compose messages. Admittedly, this particular application is unnecessary to iPhone, but it shows a limitation of iPhone Safari with Ajax applications that make too many assumptions about the web browser's capabilities.