The more recent iPhones are as good as many P&S cameras.
Background blur is based on something called "depth of field." A narrow depth of field results in background blur. Depth of field takes some time to understand, but it is basically impacted by the size of the camera sensor, the actual focal length of the lens, the distance to your subject, and the distance between the subject and the background.
untitled-54.jpg by
Adam Brown, on Flickr
untitled-11.jpg by
Adam Brown, on Flickr
It is very difficult to achieve significant background blur with a small sensor (95% of P&S cameras, iphone, etc). You can artificially create background blur on the iphone, but to achieve it really, you need a decent sized sensor camera.
In other words, you need either: an enthusiast P&S, a mirrorless camera, or a dSLR.
An enthusiast P&S, like the Sony RX100 as the prime example, can achieve a tiny bit of background blur, but not a whole lot, because the sensor still isn't very big, and the lens isn't very long. (Though far superior to 95% of P&S cameras).
More likely, you'd be happy with a mirrorless camera. Olympus and Panasonic have some nice m4:3 models that can achieve the results you are seeking. Fuji has some nice models. The Sony A6000 has proven very popular as a top performer. If you don't feel you need a viewfinder, you can save money with the cheaper cousin of the A6000, the A5100.
You can also look at entry level dSLRs, and older used dSLRs. The cheapest way to get great background blur results is to get an older used dSLR, and a 50/1.8 lens. The combination is fairly cheap, and can achieve spectacular results.
, lol, anyway if anyone can help this would be great!!! 
