Wow... This sums up my experience too. Everyone is touting the iPhone as the next app device, and that might be true, but it's got a ways to go. The UI is so slow and unstable that it's breaking my "I can tolerate a computer crashing, but never a phone" personal rule.
If I don't (ever) use any 3rd party apps, the phone seems about the same as before. After I play some games, I tend to power off and power back on to get it back into good shape.
iPhone OS 1.x wasn't anything like this - even with me jailbreaking it and throwing all kinds of bizarre apps onto it.
I played with it enough that I did get the occasional reboot, but maybe once a week. In the 10 days I've had the iPhone 3G it's rebooted on me at least three times, I've had app store apps crash at least a dozen times, and had countless weird 5-10sec freezes.
Really hoping 2.0.1 fixes a bunch of these problems...
I'm sure it has nothing to do with all the other features like GPS, a brand new contacts app, a better calendar app, push support, etc. Yes, it must be the DRM.