On Friday I received my iPhone 3GS fresh from O2. I've had my 2G for around a year now and with my Tmobile contract expired it was the perfect time to upgrade.
Aesthetically there is not a big difference between the 3G and 3GS however the phone is a lot quicker compared to the 2G, applications load quicker, text messages and emails load instantly and moving around the interface seems a lot more smooth.
Simcity was the most power hungry application I had on my 2G and it took a mean 34 seconds to open, on the 3GS it takes a more reasonable 17 seconds making the 3GS twice as quick.
The camera is a small improvement and works slightly better in low light but is still one of the iPhones weaknesses. The upload to YouTube feature is a nice touch however I've yet to find something interesting enough to upload.
The majority of other improvements come in the 3.0 software (rather than updated hardware) with the wide keyboard on text messaging being one of the best improvements. Copy and paste works well though is a bit fiddly. Being able to buy music, videos and apps over 3G will hurt the bank balance I'm sure.