As a consumer, I wouldn't pay for this service.

As a businessman, I would have tacked it on to the (already overpriced) iphone data plan. Simple marketing is that people will get more excited about an included service than an add-on, and with the price as high as it is already they could have gotten away with tacking on an additional $5/month to EVERY iphone data plan and make a lot more money than the $99/year mobile me due to sheer volume. It would be a great marketing hook and probably even move more iphones off the shelf (not that they're just sitting there now).