Well I had you beat in terms of crappy old phone ownership. I just upgraded from my good old Sony Ericsson w800i (had it for ~3 years) to an iPhone 3GS. I thought long and hard about this move, I've seriously pondering upgrading my phone for about 3 - 4 months now. I finally went with an iPhone mainly for two reasons:

1. I bought myself a Mac desktop last year and I love it. I felt the iPhone would compliment nicely.

2. They've had a couple of iterations to sort out the kinks in the iPhone now and IMHO it shows.

The 3GS feels very polished to me and I don't regret my decision. I've only had my iPhone for about 10 days and I already have Google Sync set up for email/calendar syncing, I've used it as a Skype VoIP handset (in conjunction with my home Wi-Fi), I've got games on my phone that are actually worth playing, mobile Internet access that's actually practical to use and I've got an awesome remote for use with the VLC media player.

I've even made a few phone calls.

I really thought about getting one of the slightly less mainstream phones that might give me more "geek cred" or something. But in the end, I just want as good a user experience as possible and I felt I would get that from the iPhone. YMMV.

Granted, upgrading from a SE w800i I probably would be more than happy with any of the current generation of phones and I can't directly comment on the N1. But all my research led me to the conclusion that if you're looking for polished, go with the iPhone. If you're wanting a little more bleeding edge and experimental, go for one of the other options.