I have a (work-provided) Nokia E71 and think it's great. I also have an iPod Touch (didn't get the iPhone as I already have the work-provided E71) and that's great too.
It really depends on your own personal preference (and budget, given the info in your original post).
I really like having the real keyboard on my Nokia E71 and it's used mainly for phone calls, email and texting. I also use it for web-browsing when out and about, although I've added Opera Mini (which is free) as I prefer that browser to the one that's built-in to the E71.
However, when at home (or near wi-fi) I use the iPod Touch for any web browsing, as the bigger screen and user interface is much better IMHO.
I find the real keyboard on the E71 fantastic for text entry, although some people really like the touch-screen keyboard on the iPhone/iPod Touch too. I suggest you head down to your local O2 store and try out the interface on the iPhone (make sure you try out the touch-screen keyboard too) ... although I suspect that once you've seen and used the interface you'll decide that £185 is well worth paying
Added benefit of the iPhone is that there are thousands of apps available for it too (some even free, and others for relatively low cost), as well as it being great for playing music and videos (the E71 can play music too, but I find the iPod Touch much better for that, which I'd expect to be the same on the iPhone).
I guess the bottom line is that if you find the touch-screen keyboard good, and as long as you can afford the £185, then there are plenty of other good reasons to buy the iPhone.