They're sold as phones to get them into shops and encourage people to buy them. As a devise, they are properly PDA's with wireless Internet connection, which allows their use as a phone. The likes of Palm have been trying for years to sell PDA's to the public and getting nowhere, only business types could get to grips with their often totally shonky OS's and crap web browsers. Apple had the bright idea of making a PDA with a super simple OS that could be understood by anyone, that didn't need a fifty page user manual and a degree in geek, then selling it as a phone through normal high street retailers. I hardly ever make phone calls, but I have a real everyday use for something with a simple OS, that is a good music player, a good web browser, that gets my emails efficiently, and many other uses beside, an ebook reader in particular. Plus a multitude of other things, like a good weather forcaster, Facebook, even little things like being able to locate pubs in an area you're unfamiliar with on a clear map. Having quality turn-by-turn car navigation, Ordnance Survey mapping of the whole country at various scales, down to 1:10k, all contained in one pocket sized device, makes it invaluable. To me. If you can't see or understand the benefits, fine, but don't get all snuffy about people who use such things every single day, like I'm doing right at this moment, otherwise I'd have to drag my laptop out of it's case, plug it in, boot it up, open Safari or Firefox, just to browse this and other websites. Or look up something on Wiki. Or programme something on my Sky box without having to switch on the tv first to see what I'm doing.
Simple.