i saw an ad in the dailymirror about dialog offering iPhones
Dialog's web page which had this offer is now not available:
http://www.dialog.lk/en/mobile/whatsnew/iphone_3g.html
Google managed to grab it before dialog took it down - have a look.
I contacted Dialog. The iPhone is legal - as in, it's not a jailbreak version.
I checked if Apple is backing Dialog's claim and I didn't find Sri Lanka in the country list: http://www.apple.com/iphone/countries/
I contacted DMS - the local Apple representatives. DMS said that they are not aware of this offer.
Perhaps the only way to find out is spend Rs 80,000+ and buy an iPhone.
Furthermore, according to Dialog, the OS their iPhones are running is Mac OS X v10.4.10
But iPhone runs on iPhone OS: it is based on Mac OS X but it's branded as iPhone OS and not Mac OS X
Check this Wikipedia article on iPhone OS.
The iPhone is equipped with a 2 mega pixel camera which can take still shots but cannot record video. The smartest smart phone cannot record video.