I have been using the iPhone 3G ever since I waited in line and bought one a bit over two weeks ago. The big question people ask me is if it's worth the $199 USD and increase in monthly service fees. It is, but only slightly. For the most part, the 2.0 firmware provided most of the improvements, like the App Store, and that's completely free for first generation iPhone users. Rather than writing a full iPhone 3G review which you've probably already read elsewhere online, I'll just post my thoughts on the more important points.
Specs
Hardware-wise, there are only a handful of real upgrades. Obviously, faster 3G connectivity ranks high on this list if you live in a city with good coverage. 3G reception in Atlanta has been great for me, but in Houston and Austin it is definitely spotty. In regards to the 3G vs EDGE argument, 3G is noticeably faster. I remember loading the New York Times homepage on my first generation iPhone over EDGE in 73 seconds. With 3G, that load time went down to 17 seconds (with 1 reception bar no less).
GPS is a very nice addition, especially with the prevalence of location-aware applications like Vicinity, Yelp, UrbanSpoon and many others. However, the built-in Maps application doesn't have the ability to use it as a turn by turn navigation tool. You can use your current location as a starting point but it does not use it after you begin (just displays it). Also, don't plan on using the GPS on any camping trips - the Maps application depends on an Internet connection to download the actual map tiles so if you don't have any reception, the GPS is useless.
That being said, there is still the cool factor of being able to see your location move on the map as you're driving. Until someone comes out with a navigation application and I can mount the iPhone 3G to my windshield, I just follow my blue dot until I reach my destination.
Other upgrades include the much louder speaker and tweaked case. You can actually hear the ringer when people call you and speaker phone is noticeably louder as well. I can't begin to explain how many calls I have missed because I was in a moderately noisy environment and never heard the first generation iPhone ring. The new iPhone is a bit lighter at the expense of a cheaper-feeling rear case with tapered edges to create the illusion of a thinner phone. In addition, the headphones jack is no longer recessed so it can be used with the earbuds of your choice without resorting to an unsightly adapter.
Complaints
The battery life is excruciatingly horrible. I woke up at 2pm today, unplugged my iPhone from the charger, went about my day, came home at 2am and received a 10% battery warning. It should come with a car charger for free.
App Store
The real upgrade is the 2.0 firmware, which brings the App Store and greatly enhances the functionality of the iPhone. While there are no lack of App Store critics, I am quite content with it. There are hundreds of applications to satisfy almost any need you can think of, and for the not-so-legal needs, you can always jailbreak your iPhone and do things like share your Internet connection with your laptop and so on. There are apps to make your iPhone a notetaking powerhouse, keep track of your finances, find places to eat, listen to Pandora, remote control your iTunes library (my fave), kill time with games and more. I really can't help but keep stating how pleased I am with the App Store. Using it for the first time felt something like finding a 100 bill in the jeans you've been wearing all day.
If I had to nitpick on one aspect of the App Store, it would have to be app upgrading process. Whenever I try to upgrade an application, it fails and tells me to sync with iTunes.
Overall
After using the iPhone 3G for a few weeks, it hasn't changed my life but it has made some things easier. I don't have to worry about updating my playlists with new music before heading out the door. I can just fire up the Pandora application and walk to class. When I get back to my apartment, I can open up the Apple Remote application and play music in my living room and pretend I have a high-end Sonos music system. As you might notice, that's mostly just software though.
The iPhone 3G might be for you if you use your phone for more than just a bit of web browsing and email checking. The 3G connectivity is the most useful hardware upgrade while GPS is just a yet-to-be-fully-realized-until-navigation-apps-are-released luxury. The iPhone 3G receives 7 out of 10 Stammys.
If you plan on picking yours up anytime soon, you'll probably still be subject to lines. I just snapped this at the Houston Galleria today:
Will you be upgrading? What are your favorite App Store apps? So far I'm digging Pandora, Things, Twinkle and Texas Hold'em.