Iago is indeed a true villain, but you are right in saying that Othello's own weaknesses were his undoing. If he had not been so compulsively reactionary and jealous by nature, he would have heard his wife out before passing judgement on her. Iago plays skillfully with the "green-eyed monster" within Othello by framing Desdemona and Cassius with circumstantial evidence against them (the handkerchief). Othello bites the bait, not considering for even a split second to check out Iago's motives or the veracity of the accusation.
Remember that Othello is a military strategist used to making decisions on the spur of the moment, but he definitely shows more address in war than in psychology. It is interesting that he trusts Iago blindly but that he does not accord the same kind of trust towards his own wife (who deserves it!). This puts Othello in a rather macho profile, where his own sexual prejudice ('Women are weak and unreliable, you know...)' leads to his downfall. His unjustified suspicion of his wife goes paradoxically hand-in-hand with blind gullibility towards a peer, his lack of character judgement being apparent in both cases.
Underlying all of these character faults is Othello's pride and inflated ego. If he had not had such exalted self-esteem he would not have over-reacted; instead, he would have taken the time to find out the truth of the matter. As it turns out, his unfounded prejudgement, blind rage, and need for vengeance lead to murder and suicide.
In my opinion, Othello is not the great tragic hero he is cracked out to be. Even when he realizes his fatal mistake, he interprets his act of violence as having "loved too much" - his very last stab at autojustification. He dies in regret and self-pity but does not acknowledge his own responsibility.