Iron Man does what a superhero movie should do. It creates characters you care about and puts them in interesting situations. Come to think of it, that's what movies in general are supposed to do. Funny how that happens.
In addition, Iron Man pulls the rug out from under a couple of superhero story conventions. One, our character begins not as a pitiable victim, but as a douchebag arms manufacturer who pretty much gets what he deserves. Robert Downey Jr.'s pitch perfect performance as Tony Stark makes us love the douchebag as much as the hero. Two, this superhero is not afraid to get involved in geopolitical conflicts, a big no-no for most of the pantheon of tights-wearers. (There's a bonus rule he breaks, but it'd give away too much to identify it here.)
Downey makes the film. He creates the first superhero alter ego you'd want to get a beer with. You're not just sitting around waiting for the next action sequence because it's just as much fun (if not more) to watch Downey be Downey. I first realized this when I saw Kiss Kiss, Bang Bang (a must if you haven't seen it already) and have noted it in every Downey performance since (especially Zodiac). Though he's obviously been around for a lot longer, he's had a welcome resurgence in the '00s, of which this performance may be the pinnacle.
But the real revelation here is director Jon Favreau, whose crowning achievement thus far had been preventing Elf from devolving into mindless treacle. While he doesn't invent a new directing style or anything here, he makes very smart choices to give the film its own energy. Simple choices like showing part of the suit testing phase from the point of view of the robot cameras recording it (producing one of the funniest gags in the film). This adds a fresh, YouTube-ish quality that brings something culturally relevant to the party.
The villain, a crucial part of any origin story, is a little lackluster and the final battle is actually one of the least interesting sequences in an otherwise engaging film. But that's about all it has going against it.
The hype, which by now you've probably heard enough of, is justified.