Quite why they came up with this limitation is anyones guess!
I would rather that the unit connected to the iPhones 30-pin connector via a cable that locks into place (rather than connecting directly into the bottom of the phone) The current mechanism means that with an unweildy HDMI connection in place, the Noosy while box may become disconnected from the phone. The current method means that handling the phone once the cable is in place is not really possible, and as such playing games on the big screen does not work well.
To be honest, if I had done the industrial design on this, then the converter box would have been included within a 2M long cable with an HDMI on one end and an Apple 30-pinner on the other end.
Picture quality is good (way better than composite!). Its a shame that apples uses for TV out are so restricted though. Jailbreak your device, install tvout2 and you will be able to see your iphones user interface on the big screen. Get mxTube, download some HD videos and astound your mates with the picture quality.