i think both are very solid phones that have their strengths and weaknesses.
from a functionality standpoint, the tilt can do more than the iphone, as it has wifi, bluetooth, gps (big advantage over iphone in my book), 3g (> edge), physical qwerty keyboard (> touch screen keyboard), can copy & paste, can edit office docs, supports microSD cards, quad band, etc.
from a usability standpoint, the iphone has some advantages: bigger and higher resolutions screen (2.8 240x320 vs. 3.5" 480x32), very nice web browser (safari > internet explorer, although opera is quite nice), much nicer UI than windows mobile (other than the keyboard), slimmer, lighter and more attractive form factor.
so, i guess it's a trade off: if you just use the phone for multimedia and web browsing, or if looks/size really matter to you, the iphone is the way to go. if you want a "do-it-all" kind of smartphone and are a power user, go with the tilt.