One of the things I like about the English language is the number of words that have multiple meanings. Take the word hysterical. It can be used to describe someone who is reacting irrationally, with an extreme excess of emotion. As in, for example, all the stock traders who heard that AT&T had activated only 146,000 iPhones in the last two days of its fiscal quarter, concluded that iPhone sales must be far below expectations, and beat Apple's stock down 6% in a single day (link).
Then the next day Apple releases its own quarterly report, and it turns out the company sold 270,000 iPhones in the same period. This is leading to all sorts of convoluted explanations for why the numbers from AT&T and Apple don't match (link).
So now everybody says that it was all a misunderstanding and the iPhone is actually selling great, but there's another aspect to the story. None of the US mobile operators are very good at tracking what has sold through their retail stores. Unlike a consumer electronics chain, they do not keep tight track of their inventory because they care a lot more about selling service plans than they do about selling hardware. So although I'm sure Apple knows exactly how many iPhones it shipped to AT&T, I doubt anyone knows exactly how many actually sold through to users.
Our industry, and those of us who hang out on the web in particular, has a hunger for quick information and snap judgments. Real, high-quality data is slow to gather, and usually too expensive to give away free (link). Often it doesn't exist at all. So we make sweeping conclusions based on anecdotes, and we're far too quick to judge successes and failures.
The bottom line: The iPhone is probably selling well, but lots of phones sell well to enthusiasts in the first month and then fall flat. We won't really know how the iPhone is doing until we have a couple of quarters of sales data to look at. Anyone who tells you otherwise is trying to sell you a stock picking service.
Which brings me to the other definition of hysterical: A situation that is very funny. I think that one applies here as well.