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I brought my iPhone 3GS in August as an upgrade from a Nokia E71. At the time I had to choose between the just released iPhone 4 and the just released 3Gs 8Gb.
So this review is biased towards choosing between the two as myself like many other people may well have the same conundrum.
The iPhone 3Gs 8Gb has a ARM cortex cpu running at 600mhz and 256mb of internal ram as well as the 8Gb of space for music, photo's and apps ect. A 3.15 mega pixel camera and weighs 315g with a battery time of 300 hours standby 12 hours talk time and 30 hours playing music.
Visually the 3Gs looks exactly the same as the 3G but does offer multi tasking under iOS 4 as well as a very noticeable improvement in speed. Compared to the iPhone 4 which has an Apple A4 800mhz processor and starts at 16Gb the 3Gs is only slightly slower in loading up apps and changing screens. The biggest thing the iPhone 4 has above the 3Gs is face time which is a nice facility.
The difference between buying a 3Gs and 4 in money terms the difference was £70 for me as both monthly contract price plans were identical. My first thought was on the capacity side and although I have a few apps I am not an app freak. Likewise I do listen to some music but would change and update it on a regular basis so 8Gb would be adequate.
This meant the choice was down to performance and screen and to a lessor extent having "the latest phone". In performance terms the iPhone 4 is slightly faster but by not as much of a difference as say a 3G to a 3Gs. The iPhone 4 "retina display" is sharper when placed side by side but in isolation the iPhone 3Gs is perfectly clear and usable just next to the iPhone 4 looks a little cloudy and edges around icons fro instance are not as sharp.
The other worry at the time was the antenna issue which from initial drawings I have seen of the iPhone 5/4Gs. Has been removed as is still an issue to a small number of users and the iPhone 4 for the US has had a minor re-design as well. . To summarise unless you need the memory capacity, latest model and need the slight extra performance of the iPhone 4 the 3Gs 8gb is more than adequate. I use it in my car with Co-Pilot 8, on the bus surfing the net and listening to music and not once thought "wish I brought an iPhone 4". I would go as far as saying unless you really need the extra capacity stick with the 3Gs as in the end both phones are limited mainly by what the actual operating system installed allows them to do.
From people I have spoken to battery life between the two seems very similar even though the iPhone 4 has a higher capacity battery. Looks are always going to be subjective but I do like the band round the iPhone 4 but the 3Gs feels more comfortable to hold. I get about a day in terms of battery life out of a few phone calls maybe an hour on the internet and downloading my emails. Playing games does seem to drain the battery quite quickly compared to other apps. Making use of the GPS means the battery can be drained in about 90 mins.
One final point worth mentioning is that if you decide to trade or sell your phone at the end of your contract. The iPhone 4 16Gb is currently worth about an £45 extra over the 3Gs 8Gb making the extra £70 spent come down to £25 at trade in/sell time.