Well, my iPhone 3GS arrived on Friday, and I've had a couple of days of tinkering with it, so I thought I'd give my impressions about what's cool.
First off, it's a G3 phone (I previously had the first generation, EDGE only phone) so it's networking is significantly faster. Combined with the processor speed increase, it's really quite snappy. Email downloads faster, and displays faster. Google maps loads and updates quickly, zooming in and out nearly as fast as you can gesture. Even large webpages seem to load up nicely. Speed is nice.
The second thing I noticed immediately seems trivial: the screen is coated with an "oleophobic" coating, which means that it repels grease. It really works, and should be standard on all touch screen devices. My old iPhone was continually smudged by fingerprints, the new one looks great!
iPhone 3G owners have had the benefit of a true GPS for quite some time, but it was new to me, and works well. The iPhone 3GS is also augmented by a digital compass, which is frankly of little use to most of us, but might be useful in some later user applications.
It also has the iPhone 3.0 OS that was just recently released, so it now supports the advanced stereo Bluetooth headsets. Carmen has one for her Google phone, which I tested and it appears to work just fine.
The camera gets a nice upgrade to 3.2GS, and includes video capture, editing and upload to YouTube. That functionality all seems to work quite well (I'll shoot some video shortly as well as some pictures as example). The camera also has autofocus, and can focus down to short distances. Both are nice improvements.
For me, the upgrade was a no-brainer really, and I'm quite pleased. I loved my old iPhone, and I love my new iPhone. The couple of gripes that I have are mostly with pricing. I was eligible for upgrading the phone for the $199 price (I got the 16gb model) which was good, but I ordered this through Apple which means I got hit with sales tax on the full price of the phone, resulting in a fifty something dollar sales tax. Ouch. And, of course AT&T slaps you with an $18 activation as well as an $18 upgrade fee, which seems like at least like they should waive one of those for customers who've been sending them substantial sums of money for the previous two years. So, it's not cheap, but no smart phone is.