> Multitouch/Scrolling

The bigger leap was from resistive to capacitive screens which ultimately allowed for multitouch and great scrolling feel. Many credit card machines still use resistive screens which is why it is so unnatural and awkward to sign

> Fully featured web browser

Probably the biggest innovation

> Syncing

It could sync but many things required iTunes which sucked

Also, the original iPhone lacked things like MMS and, for some unknown reason, a proper call history screen.