Read lots of coverage last week that for those with iPhone 3Gs, you may want to hold off on the 3GS upgrade. Most reviewers had two rationals — 1) the upgrade price with how at&t works wasn’t very attractive and 2) that the spec upgrade wasn’t dramatic.

So a few thoughts on the upgrade and the whole 3G vs 3Gs debate:

On the pricing, it is true that at&t handled this pretty poorly and “penalized” those who bought the 3G in that they weren’t eligible for the new 3Gs pricing. On the other hand early adopters have traditionally always paid a premium. But more importantly, even at the non-upgrade price, if you look at the annual “cost of ownership” with monthly cell bills easily in the $100+ range, adding $200 to a device price isn’t as dramatic as one would think. I have a few accounts with at&t, and was lucky that one of them was upgradeable, so I got the better price.

Re: the spec upgrade. For anyone like me who started with a TI99, moved to the Apple IIe world, and then upgraded to 286s, 386, 486DX, etc — you remember what a big deal it was when the processor got a speed bump. It made tasks that once took 10 second takes just 2 secs.

It was with that in mind that I read the excellent blog by John Gruber, Daring Fireball, and his post titled “The Next iPhone” that I knew I would upgrade:

So, that guy was the first one on the team to get a Pentium-based machine, running at, if I recall correctly, 90 MHz. (The rest of us all had 486-based machines.) A few hours after he’d started using the new machine, word started to spread about just how fast it was. “You should see him do a build.” Soon there were a dozen of us crowded into his office, marveling, maybe even slobbering, at the speed of his C compiler’s progress bar.

A new computer almost always feels faster than the one it replaces. In the old days, though, every few years you’d get a computer with not just a faster processor but a next-generation processor, and the resulting performance increase was dramatic. For the Mac, those were bumps like the first 68030s and 68040s, or the first batch of PowerPCs. For the PC, the 386, 486, and Pentium.

Based on information from informed sources, I believe the processor in the next-generation iPhone is going to be that kind of upgrade.

(emphasis mine).

So last week I ordered the new 3GS, and after going through a day where all my phones were bricked as at&t sorted out the activation ( 3 phone calls to “611”, 2 trips to the at&t store, and 4 sim cards ! ) I can now safely report that the processor upgrade makes a huge difference.

The way I use the device I’m often switching between applications, clicking on links, etc — and things now just bounce right open without delay. Search is snappy, and that annoying text entry lag that still popped up on occasion is totally gone. Browsing is faster too, and many iPhone optimized sites like Google Apps actually feel like native apps now. Add in the video feature which rivals Flip for quality (original, not Flip HD) and the 32 gigs of space, and it’s a big upgrade.

Bottom line — just the speed improvement of the processor and the underlying performance makes this a worthwhile upgrade for heavy users out there. Speed wise, everyone I’ve shown the new device to who also has the original 3G , comments that it’s hard to go back to the original 3G after using the 3GS for a few minutes.