Hi Scooba
I use to have the Iphone 2g and replace it by the 3gs as I was out of contract.
There are a couple of stuff you can do with the 3gs like video, better picture I think, voice control and you also get the GPS.
The 3gs is snappier than the 2g and it seems that the phone calls are of better quality.
Overall it is an evolution of the product but no revolution if you see what I mean. I would not have bothered if I was not out of contract IMO.
Hope that help
Steph