Applications, Enterprise Support, Ease of use, Microsoft Exchange Support (email). Though most phones are catching up now, the iPhone is still on top. People love it. I have a 3GS myself, but in my line of work, I HAVE to have it. I have to be able to be contacted any time (great, huh?). And my work also uses Microsoft Exchange.
We have actually written applications for our iPhones as well. Simple applications, but useful for us.
As for why the teenage girls and guys without jobs get one, it's definitely hype. They want it cause it's the coolest and most expensive out there. It's a fashion statement to them.
Just like how they buy an Apple MacBook Pro for college (and have no idea how to use it), when they could've bought a Windows computer that served their needs just as good or even better for half the price.