I get along fine with iOS4 on a 3GS with spotlight disabled, no real slow downs (but then I tend to be a bit OCD with apps left in a multi-tasking state). Reports have said that iOS5 runs fine on a 3GS also. It could be worth thinking that they were just vanilla installs too, if you did your own and disabled spotlight etc you could find that it runs perfectly acceptably on a 3GS.
That said however, with the rumors thrown about that we could expect the iPhone 4S/5 at some point this year, I would recommend going for a 4. I think you'd really appreciate the performance out of the cost compared to a 3GS (i.e, for a little bit more you'd get much improved hardware and greater performance etc) plus you get the lovely hi-res screen, front facing camera etc