If you include the price of the phone, that has to be the most expensive FRS radio ever made. Apple should buy this company... just imagine a FRS radio with an Apple logo on it. Apple could charge $699 each for the iRadio and people would line up outside the night before the release date just to get one!
I'd also question the legality of it in the US. I'd be surprised if it got Part 95 approval. I even dare say it's a silly idea. If you need a FRS radio, go buy one for $20 and if you loose/break it then no big deal.
Who would want to use an expensive smart phone as a two-way radio?