Xamdou said:Iphone 3G -> 3G S is a much better upgrade than Iphone -> 3G going by what you bolded.
Video recording by itself is a reason to upgrade, and would not be possible on the current 3G hardware. Hence the faster processor and more ram, which also leads to faster app loading and much better performance overall. The 3.2 Megapixel camera, compass, voice control, inline volume controls are just icing to the video recording cake.
If you read what I said again, you'll see that I think the 3G->3Gs is a bigger upgrade than iPhone -> 3G.