iPhone 3G feature
The new name suggest, the new iPhone can bring you the Internet much faster. It would exploit AT&T's third-generation (3G) cellular network thus bringing you Web pages in less than half the time as the old iPhone. Further with 3G, you can talk on the iPhone and surf the Internet simultaneously.

NOTE : to be on that speed or use those features, you have to be in one of limited AT&T's 3G network areas. wireless.att.com/coverageviewer

Tip: Whenever you're outside of a 3G area, turning off the iPhone's 3G feature doubles the battery's talk time, to 10 hours from 5.

GPS
The new iPhone has true G.P.S. in addition to the fake G.P.S. of its predecessor. The new GPS system shows your location on a map by analyzing nearby cellphone towers and Wi-Fi hot spots.

Unfortunately, the GPS system offers little as according to Apple, the iPhone's G.P.S. antenna is much too small to emulate the turn-by-turn navigation of a G.P.S. unit for a vehicle, for example. Instead, all it can do at this point is track your position as you drive along, representing you as a blue dot sliding along the roads of the map. Even then, the metal of a car or the buildings of Manhattan are often enough to block the iPhone's view of the sky, leaving it just as confused as you are.

Price
The other drastic change is that iPhone's prices has slashed by half; $200 for the 8-gigabyte model, $300 for the 16-gig. A year ago, an 8-gig iPhone would have cost you $600.

NOTE : The basic AT&T plan - unlimited Internet and 450 minutes of calling - now costs $70 a month instead of $60 (plus taxes and fees), and comes with no text messages instead of 200. To have text messaging, it costs at least $5 a month more. Although iPhone 3G service now matches the plans for AT&T's other 3G phones, at the end of your two-year contract, the iPhone 3G will have cost you more than the old iPhone, not less.

Audio Quality
The third improvement is audio quality, which has taken a gigantic step forward. Both callers and receivers will sound crystal clear.

Other improvements
- the new iPhone feels even better in your hand, thanks to a gracefully curved, shiny plastic back.
- It also has a standard headphone jack so no clunky adapter is required for your favorite non-Apple headphones.
- The power adapter has been shrunk down to a one-inch cube, so it doesn't hog an extra spot on your power strip.
- The four-function calculator now turns into a scientific calculator when you rotate the phone 90 degrees. There's an address book search box, parental controls and instant language switching. That feature is made possible by the on-screen keyboard, with keys that change to reflect the language you've selected.