Here’s a list of the 4 main differences that makes iPhone 3G quite better than the older 2G.
1. GPS Tracking (for using with Google Maps and other tracking apps downloadable from the App Store, like “GPS Tracker”, “Take Me To My Car” and “Speed”.
2. 3G network for faster data downloading (when using an AT&T SimCard).
3. 3.5 mm headphone minijack for using all your headphones (the alder one is compatible only with Apple’s original iPhone 2G jacks or you have to buy a converter).
4. More space, of course (see iPhone Short Description for exact memory space of iPhone 2G and 3G).

[...] also the short Main differences between iPhone 2G and 3G Possibly related posts: (automatically generated)iPhone (short) descriptionnew iphone 3GiPhone 3G [...]
i am planning to buy i phone .please suggest me which is better 2G or 3G Iphone.please give me the maximum number of difference to get to know about IPHONE.
The iPhone 3G is obviously better than the 2G, because it’s newer [read the article and the chart for the differences here: http://ivitto.wordpress.com/2008/10/22/detailed-differences-between-iphone-2g-and-3g/ ].
Anyway, I suggest you to wait until June: a new iPhone is probably going to be released in that month (at the WWDC ‘09).