Bluetooth is mostly viewed as a perhipheral interconnect, sort of like usb or a control bus like i2c (what your remote uses to talk to your television). Compare to ieee 802.11 which is the media/transport layer of a network.

Bluetooth devices and 802.11 both operate in the unliscensed 2.4ghz ism band but bluetooth deivces operate at lower-power, typically around 2.5Milliwatts and have a range of something like 30-40' compared to the range of a standard 802.11 100 milliwatt access-point which might exceed 100 meters in circumfrance or 2.5 kilometers with highly directional antentas... Bluetooth is also a frequency hopping rather than direct sequence spread spectrum technology.

I think one of the issues that bothers the bluetooth people is that heavy use of 802.11 (ie if it's successful) may make deployment and acceptance of bluetooth harder becuase of interference from hundreds of more powerful and less spectrum efficient direct sequence devices hogging all of the available spectrum...

Basically bluetooth is useful for what it is (a 1Mbit perhipheral bus) so yeah it can replace my serial cable for syncing my palm unit or maybe my remote control but it doesn't really have any revelance in terms of competition with 802.11 as a network interconnect and devices like cell phones allready have their own wirelss communications mechanism. Moreover the relevance and appropriateness of yet another low bitrate bus should be seriously questioned, when applications include things like trsnfering pictures off of digital cameras or moving data to printers or laptops why would we want to use a 1Mb/s transport medium when other faster options (some wired some not) are available. I fail t see for example how bluetooth would make a better interconnect than usb for example if you have to tranfer lots of data (say from a digital camera or to an mp3 player) sure you don't have to wire anything up, instead you have to wait 12x longer under ideal conditions to move the same amount of data, for that kind of hit, I'm more than happy to plug something in.