Development of the iPhone is keeping up its pace, and Apple says their June release date is on schedule. Some concerns arose when they mentioned not too long ago that the Leopard release for OS X would be delayed to push development of the iPhone up, leading some to believe that perhaps both projects might end up not meeting their deadlines. It's quite common for releases to be pushed back (we're looking at you, R600), but Apple is committed:

From the beginning, Apple said that the iPhone would ship in June of this year and would be a Cingular Wireless (AT&T Wireless) exclusive phone. Late last month, an unofficial launch date of June 11 was reported by CNET. The launch would coincide with Apple's Worldwide Developers Conference in San Francisco which is slated to run from June 11 through June 15.
A timely release is important for them, especially considering they are planning to have sold at least 10 million units by the end of next year. At $499-599 a pop, that might be difficult.