In contrast to earlier statements, and something they took a lot of flak for, it seems Apple has changed their mind regarding iPhone software. They will be allowing third-party development. At the All Things Digital Conference, they confirmed they'll be allowing outside developers to work on the iPhone, and will be providing a mechanism for it. Since they are "security-minded", they are probably going to create some form of SDK that has certain restrictions, at least from Steve Job's wording:
"We're working through a way [to support third-party development]," Jobs said. "We've got some pretty good ideas that we're working through, and I think sometime later this year we will find a way to let third parties write apps and still preserve security."
A bone of contention for Apple was poor development leading to crashing phones, something that they want to avoid at all costs. If you've used a PDA for any length of time, you're probably used to occasionally having to reboot your phone to fix a stuck app. Apple obviously wants to avoid this scenario. Is that truly possible, however?
Given the flexibility a PDA can give you with 3rd party applications, it makes perfect sense for Apple to allow open development. What exactly they have in plan remains to be seen, but at least it's a start.