That's complete bullshit. You have no idea what the original iPhone did then. That's exactly the point of @schnell's comment above. No one was using their "smartphone" (or super duper feature phone like the N95) because they were a disaster to use. What Apple did was create a complete package of software and hardware, and provided web apps functionality. It's only when users found out how amazing the package was that they said "Why did you short-change us!?!? That thing is great, let us use it all the way! We want native apps!"
When people saw my iPhone they'd ask me what I thought of it, and my answer was always that within 3 years everyone would have one or something similar. There was just no comparison, this was finally a usable handheld computer with a SIM card. So whether you call it a "feature phone" or a "smartphone" is irrelevant: it was a revolution in phones, and every single smartphone today is a direct descendant of the iPhone.
Put another way, the chasm between the phones before iPhone and the iPhone is immensely wider than the difference between the iPhone and today's smartphones.