I would think the question wouldn't be iPhone or Instinct but Sprint or AT&T.
Walt Mossberg thinks the Instinct is good but "Doesn't Ring True As an iPhone Clone" and says in summary "If you're a devoted Sprint customer, or want to avoid AT&T, the Instinct is an OK choice. But it's no iPhone."
http://online.wsj.com/article/SB121322194642065867.html
and his review seems to echo what a lot of other reviewers say - which is that the Instinct is good but not as polished as the iPhone or a Blackberry in terms of the OS, the keyboard, and web surfing.
If you like Sprint, and Sprint is cheaper, and you have good coverage, then the Instinct appears to be good. But according to the reviews that I have seen, the iPhone is better.