Is one better than the other?

Maybe, but I see it more like an "Apples vs Oranges" type debate.
Although the devices are both phones, their purpose is vastly different.
The iPhone is a media/entertainment device with email and internet capabilities.
The WM devices are business tools.
I am not sure about this, but I do not think the iPhones supports MS Office documents, nor does it allow 3rd party software.
I may be wrong though.

I HAVE seen many people argue that the iPhone's better UI will force WM to make many changes.
Perhaps, but making the UI vastly more simple is going to take away some functionality.
It reminds me of the people who complained about the size of the iPAQ hx2xxx models being too large for them, then they turned around and complained that the screen on the new smartphones were way too small.
It is all about trading wants and needs.
Companies may advertise "No Compromises" but life is all about compromise.
If you want a 3.5" screen, you have to have a device big enough to support it.
If you want a simpler UI, you need to tone down all of the specialized functionality.

On a personal note - I know there are many going ape over the iPhone, but I cannot imagine why I would ever want one (at least in its current configuration).
As I have said before, it tries to do two jobs at the same time, while really doing neither very well.
For the price I would rather go buy a Smartphone and an iPOD.
Sure, the iPhone is a two-in-one device, but it has neither the functionality of the Smartphone, nor the capacity of the iPOD.
Before you say, "You do not need the 30-80 GBs that the iPOD provides," let me just say that my iPOD is choc full right now.
It may not be incredibly desirable to carry two devices, but until there are vast improvements, I will keep up my current routine.

Bottom line, at least until April 2008, if you want an entertainment device with phone capabilities, you should be on the IPHONE SIDE. If you want productivity tools with a phone you should be on the POCKET PC side.