I am still using the original iPhone as well. My wife bought 3GS about a month ago and I have used 3G on many occasions.My question is, will going from the 1G to 3G be a big step up in performance, noticeably so that from the 3G to 3GS would be un-necessary? Or should I spend the extra and get the 3GS, which I've read is 'better' than the 3G?
Although 3G is faster than the original when transferring 3G data, it isn't faster at other things. Although I find the original and 3G sufficiently fast, it does get bogged down due to slower processor and limited RAM (128 MB).
Given the price difference between 3G and 3GS, I would get 3GS no questions asked. It's not only the speed, which is indeed much faster (almost everything feels instantaneous), but larger storage (16 GB vs 8 GB), better camera and video recording, compass on GPS (very cool and surprisingly useful when using compass-aware apps like Maps and Yelp), voice control, and other little things.
That said, I am personally holding off upgrading to 3GS as I want more dramatic iPhone upgrade next year (not to mention not wanting to have the same phone my wife has).