The iPhone, like many smartphones is quickly closing in on the lower end of the market of many types of device, and in some ways, providing an end result which is good enough for everyone but an enthusiast. Plus the fact that these are all blended together so well into one slick, easy to use device, the experience can be better than a collection of dedicated devices.
I own an iPhone 5, and as a result I have no need for a pager, Sat Nav system, MP3 player, PDA, portable games console, calculator or train timetable. Even products such as a compass, torch and a wife tracking device I can now make do without.
However, unlike the average person, I'm into my photography. So for my needs, the iPhone 5 and 5s both fall far short of my expectations - but I have reached the point now where my S90 stays at home all the time. If I want better quality than the iPhone, the S90 just doesn't do it for me.
I can see little point in the average consumer buying a point and shoot in this day and age. They are currently selling to people that don't own smartphones, people that don't realise how little difference in quality there is, or people that need zooms/waterproof cameras.
For me, two big factors that influence image quality are control over depth of field and light gathering abilities. Both of those are directly influenced by the physical diameter of the aperture, no matter how small the sensor. So no smartphone will ever rival a DSLR with a big lens on it, unless the smartphone has an equally big lens on it.