It's nice that Apple has conceded the need to allow other developers to build apps for iPhone.
It's also nice that they have conceded that they have delivered a platform full of security holes -- and that they plan on fixing this.
The most obvious security hole is a gaping opening: everything runs as root (system administrator). That had to he a quick and dirty fix -- exactly the sort of thing that leads to long-term trouble. You would have thought that Apple would have learnt the hard lesson of the past: make a system as secure as it's ever likely to need to be from the start, not as secure as you think you can get away with now.
The really huge thing though that this development opens up not only for the iPhone but the iPod Touch (and one presumes future iPods which should be build on the same platform) is turning it into an alternative computing platform. This opens up really interesting possibilities, like a decent voice over IP implementation. Aside from what this may do to whatever deal Apple made with Cisco to avoid confusion over the Linksys iPhone, this would be a very attractive addition for iPhone users roaming in parts of the world where cell phone service is very expensive. The option to control whether you connect through WiFi or the cell network for data traffic would be useful here as well.
If Apple fixes the security problems (which I hope is not too hard an ask, given that the list of existing applications is small, and most are based on apps that run in a more protected environment on other platforms), this is a really big development. Many, many more people should be interested in an iPhone if it can run apps of interest. This puts it much more into the camp of smart phones running a real operating system, like a variant of Linux or Windows.