iPhone 3G vs. iPhone 3GS
Apple apparently believes the experience is not up to their standards. However, the actual use of the video functionality may very well not be useful for some people. It sounds good, but it is rarely the case that I would actually go about recording videos often. Even when I do, how many times do you go back and look at your own videos?(let alone pictures) On those rare occasions, the current video application from Cydia is more than enough. You don't want to overuse the feature either, since it will be a heavy toll on your battery and memory.
Until now, it is still not known how many of the improvements will be available by software update. If the audio-recording feature is not available for upgrade, I will be really disappointed in Apple. Speed apparently is one of them. I saw a video regarding the improved performance from the Iphone 3.0 beta 5, on a regular iPhone 3g.
The camera now is perfectly fine, and picture quality will be improved by the software upgrade. Obviously it will be a lot better on the newer version but even if you really want superb quality, you would rather go for a regular digital camera which will offer a lot more functions.
So, I think this upgrade is rather modest and mainly to get some of those hesitant people to finally buy one. Those people waiting for an excuse get an iPhone will have a minimum incentive to do so. The fact is that you would have rather bought the device a year ago, to make use of the device all year. Apple is probably focusing energies on the mythical MacTablet which would again require significant changes to OS X in order to support battery life and maybe some nice Pixel Qi readable screen (http://www.youtube.com/watch?v=3XCJdD_gR8M). It would also extend multitouch capabilities because of more screen real estate being available for more complex touch commands. Browser capabilities would also be greater than in the iPhone OS. It would need to have as much functionality as the desktop browsers in order to completely annihilate the Netbook market.