Will "iPhone Leopard" cost $129 (or $600)?

A lot of the complaints about iPhone 1.0 can be fixed in software: instant messaging, iTunes Store access, video capture, ringtones, games, Flash, more Bluetooth support, etc. Apple probably plans to address all of those shortcomings. I understand why they're not already fixed; getting them all into the first version might have delayed the product launch by six months.

My question is, having spent $600 on iPhone 1.0, what will it cost me to get the new features when Apple does finish them?

I've owned a Treo 270, a Treo 600, and a Treo 650. There were some firmware updates to them, but I don't recall the updates adding any significant new features. As far as I know (having never used a Windows Mobile-based phone), this is the norm for cellular phones: a firmware update just fixes bugs. You only get new features by buying new hardware.

On the other hand, if I buy a Mac (or a PC), I fully expect it to last through at least one or two significant operating system upgrades. I'll pay for each new OS release (Mac OS X Tiger was $129), but I won't necessarily have to buy new hardware.

Paid ringtones and access to the iTunes Store would both be revenue generators for Apple, so I expect to see those features added to iPhone 1.0 gratis. What about the other things, like instant messaging and video capture? Will Apple charge me $129 for an "iPhone Leopard" firmware update? Will it just ask me to shell out another $600 for iPhone 2.0 hardware?