Don
I personally have a 3GS, my GF has an iPhone 4 coming from an 3G. If you aren't planning to upgrade to the i4, and looking to upgrade then the 3GS is worth it, you will a decent speed upgrade, slight camera upgrade and get full multitasking from ios4.
I personally have decided not to upgrade to the i4 after playing with my GFs, as it isn't a huge leap and the amount of problems it is having at the moment.
Not exactly a lot of problems for the 4?
I agree with you in terms of upgrade though, I think the 3G to 3GS is a bigger leap from the 3GS to 4 purely for speed reasons. Since IOS4 the 3G is nearly unusable for my wife.