See Part #2 for details on the AT&T Data Plans.

For an iPhone 3G user, the Glen "Big Baby" Davis-style drooling has begun:

Yeah, that burning sensation is tech envy. The first big decision: is the new model worth it?  You'd think this would be the main decision for a current iPhone user.  It's easier than you think if you own an iPhone 3G (assuming you've got the money to upgrade).  Let's look at what changes model to model. (NOTE: If you own an original iPhone and are still using it, you should upgrade.  You're really missing out on some killer features.  Even if you go to 3GS, the performance will impress you.  Not to mention, if I see it in person, I'll give you a hard time.  Because I can.)

iPhone 3G -> iPhone 3GS: What's New?

• Faster Processor (strong performance gain, compared side-by-side)
• Upgraded camera (don't use this much)
• Video recording (don't thins I'd use this much either)
• Upgraded Network compatibility
• New compass
• Inline remote control
• Larger battery
• All iOS4 features

Bottom line: The performance gains alone make it a better phone, because every app is snappier.  The camera/video stuff doesn't excite me.

iPhone 3GS -> iPhone 4: What's New?

• Upgraded display (doubled resolution, looks like it will make a huge difference)
• Video chat (only iPhone 4 to iPhone 4, not a big deal in my book)
• Upgraded camera with Flash and front camera (see 3GS)
• Upgraded WiFi/Network support (Wireless-N, will help in certain places)
• A4 Processor (same as iPad, unclear what the performance gains will be)
• Gyroscope (mainly a gaming feature)
• Second microphone to help block background noise (this is a great feature)
• Upgraded battery (again)
• New form factor (it looks nice, but this doesn't affect usage)

Bottom line: That screen might be enough by itself.  Add in more battery and the new look, and it's a nice set of new features.

My Take

If you own a 3GS, I don't see a whole lot in that list that will make the iPhone 4 upgrade a "must".  There is also the software update coming soon (iOS4), and 3GS owners will get every feature from that as well.  What's the rush?  Waiting another year might get you to the next model (iPhone 5, iPhone 4G, whatever.) For 3G owners (that's me), it's time.  You get two lists of upgrades (above), and the speed boost will be ridiculous.  Done, right?  Not quite. Part #2 will cover AT&T and the data plans.  That's a whole different world that affects the upgrade decision.