Many of the changes that make the iPhone a nice device are really features of iOS 6. But the thing is, you don't need an iPhone 5 to get iOS 6. If you have any iPhone since the 3GS, or any iPad since the iPad 2, you'll get iOS 6 and all those features. This includes an improved version of Siri, Apple's new mapping and navigation software that seems nice, but which apparently takes away walking and mass transit support, and a new version of iTunes.
While Apple has done little beyond keeping up with the state of the art, this doesn't mean people won't buy it. There's no doubt that the iPhone will sell in the gazillions, partly because it's an iPhone, and partly because it's a very attractive iPhone. The new version is thin partly because it's moved away from the glass rear cover and now has aluminum on the back. It comes in two colors, white with a silver-colored aluminum back, and black, with an anodized aluminum back cover.
I think the black one looks a lot nicer, but that's just me.
Apple also bypassed the trend for ultra-large phones. In his presentation, Tim Cook explained that the iPhone 5 is designed to fit comfortably in your hand, and to be optimized so that you could type on it with one hand. This is not a trivial feature, especially if you're tried using some of the really big Android devices that seem as if they should come with an external keyboard so you could use them. Keeping the same width (in the portrait orientation) certainly makes the device remain useful for dialing the phone or typing email or social network messages.
In one sense, Apple's conservatism is probably a good idea. The company wants to hang on to its existing customers, and to get them to upgrade to the iPhone 5 as soon as their contracts will let them. Radical changes in design could have an adverse effect on some users, and Apple chose a safe path-at least in most things.
Where Apple's path was less safe was in the change to the docking connector. Instead of using the large connector that's been around since the days of the first iPod, Apple created a new, much smaller connector that can be plugged in without having to have a specific side up; it'll work either way. This makes everything from car audio systems to hotel radios obsolete, but Apple is also going to be selling adapters.
The iPhone 5 also isn't getting wireless charging, it's not getting Bluetooth 4.0, and you still can't use a micro-USB adapter. So what you've got coming on Sept. 21 is a very nice incremental upgrade for the iPhone that will sell very well precisely because it doesn't break any new ground. Apple aficionados will get exactly what they're used to getting, and the leading edge of technology will be elsewhere.