being not quite as used to sms messages as europeans, americans sometimes have issues of coming to terms with the concept of sms text messages. on the other hand, americans are much more used to instant messaging or chatting or whatever you might call it. so what often happens in situations like this is that people try to represent one concept in terms of the other, which in this case is not a very good idea.
apparently, the designers and implementers of the iphone's sms app have never used text messaging themselves. the result is a messaging app that displays messages in a chat-like format (which very often simply is not an appropriate representation of text messages), and has some incredibly stupid restrictions, such as the inability to send a message to more than one recipient. how would you like an email app that would not allow you to send an email to more than one person? and since the iphone has no copy&paste concept whatsoever, you actually have to retype messages you want to send to more than one recipient. welcome to the stone age of text messaging.
the chat-like representation of sms messages was something that was already implemented in some nokia phones in the late 90s. it basically was a shameless attempt to rip off teenagers, which of course would happily start chatting, and then be presented with monstrous bills because every "yes" and "no" would be charged the full price (which was and still is ridiculously high) of an sms message. that goes along well with the iphone's inability to display the size of a message, so that people don't really know how much they will be charged for a message they are typing anyway.
i just hope that the current sms app on the iphone is so bad only because the designers and implementers were so utterly clueless about the medium they were targeting; a less positive explanation would also be possible, involving some conspiracy theory about how apple delivers products to drive up sms charges. but then again, the current deficiencies of the sms app are so pathetic (screwing up non-ascii characters to the point of discarding complete messages and being unable to send messages to more than one recipient) that the cluelessness-theory looks like the more likely explanation...