I was happy to hear that Apple was including a 3.5" jack on the iPhone. There would be no having to lug around an adapter for headphones like I did with my Treo. Then i got my iPhone and tried to plug in my Bose noise cancelling headphones and they wouldn't work. Close examination revealed the plug wasn't all the way in because the jack was recessed! This may become one of life's great mysteries as to why Apple designed it this way.
Then I started reading about people using exacto knifes trimming the plastic to get it to fit into the recess. I thought that would be too "rough" looking.
I remembered I had a Black and Decker Rotary tool, which I bought for working on my sons' Pine Wood derby cars. Those days are gone, but I dusted off the power tool. I chose the wired brush tool pictured on the left here and went to town fixing all my jacks.
It was about 20 seconds of work on each jack and 100% worked flawlessly after I finished. And they didn't look half bad either. Here's a picture of a "modified" jack at the top and the same jack on the other end "unmodified". Maybe I'll setup a cottage industry modifying jacks to fit into iPhones. :)