I have the iphone and the wife has the instinct. We're about to use the instinct for target practice. It's useless. Even my Moto Q was better than the instinct.
pros for the iphone: free apps (pandora, shazam, games galore), cheap apps (virtual pool, OMG I love this game! $2.00), ability to multi-touch (2 fingers to expand, compress pics, etc), integrates direct with Exchange (no POP), 16GB, 3G network, store movies, music, podcasts. Today at the gym I was watching Get Smart on it.
cons for the iphone: AT&T; their 3G service has blackouts so I often just keep it on the edge network, no memory expansion available
It takes a few minutes to get used to the input but once you do, it rocks. I love my iphone.
Oh, I should mention, apps are often updated and when they are, you get free updates. They install over the phone in a few seconsd, no need for a computer.