Is the market for the N86 really owners of the N95 and N82, whom Nokia is hoping will upgrade? I had the impression, as 3G becomes more commonplace, that they think the market for smart phones is expanding and the N86 is their mid-level phone for people who've never had a smart phone before. For someone like that, the N86 will be a nice package, in which Nokia builds on previous N series phones and gets some of the things right that they messed up on the N85 (especially build quality).
I also think from a marketing perspective the question of whether or not the N86 is a replacement for the N82 is tricky (I'm not trying to restart the flash debate). It is supposed to have a better, more sensitive sensor, better wide angle lens, wider aperture settings. All this allows more light to the sensor and should make for better photos in all lighting conditions. And they bring back the mechanical shutter that was missing in the N85.
See this video for details:
http://www.youtube.com/watch?v=MPcEQAhIY1Q
So the N86 may be the best Nokia camera phone ever, in every respect except the Xenon flash. Yes, for those people for whom the flash is the most important factor (again I'm not trying to start the debate again) the N86 will be flawed and not a replacement for the N82. But the N86 may well be a better camera in many other respects, so the comparison to the N82 may become apples and oranges. At that point, it seems like the N86 could lay claim to the flagship camera phone title, even if not in the same sense that the N82 holds it. Of course, the N82 is a pretty old phone at this point, so for anybody who doesn't already have one, for better or worse, the N86 would be the flagship camera phone. I guess I'm trying to say, until something changes with the flash technology that allows it to be fit into a smaller (slider) form factor, perhaps what it means to be the flagship Nokia camera phone will go in a different direction, that can't really be compared to the N82. (And of course, the N86 would be an upgrade to the N82 anyway, in every respect except the camera.)