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Well, by "handheld", the closest you're going to come is the Eee PC, which isn't exactly so handheld. Apart from that, there are very very few, if any, truely "handheld" open linux devices.
Yes, lots of DMPs and such, (like my Cowon A2), are based on Linux, they do not allow any customizbility, and the linux kernel never shows, and it might as well not be based on Linux; there are no Linux traits on it.
Anyway, the iPhone has already sold 5 million units in less than a year. I don't believe any other smartphone has accomplished that. It'll definately change the smartphone market, but I don't think it will kill WM Smartphones: there are simply too many WM fans and powerusers (although I'm a convert)
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