3G has a 412Mhz processor, 3Gs has 600Mhz
3G has 2mp (still) camera, 3GS has 3mp with video support
3G has (theoretical) network speed of 3.6Mbps, 3GS can lock onto HSDPA @ 7.2Mbps
3G uses OpenGL 1.1 graphics, 3GS uses OpenGL ES 2.0 (faster graphics draw)
3GS also has voice control and an embedded magnetic compass
"Alledgedly" the 3GS also has longer battery life

On paper the 3GS is a better gadget. In use, it's barely no different. You won't see 3.6Mbps speed on a 3G and you won't see 7.2Mbps on a 3GS; the internet browsing speed/youtube buffer speed is negligable at best. The difference between the 2G network speed and the 3G is lightyears, but the same cannot be said for 3G > 3GS.

Basically, if you want a (slightly) better camera, video support, voice control and a compass (why? lol) then get the 3GS. If not, get the 3G...

As for Chop Shop's "informative and accurate" reply;

I don't perceive my iPhone as "flashy"
My contract is 12mths (actually thats not strictly true, it's a monthly rolling contract"
Which costs £22.50 a month for no limit on calls, texts, and unlimited internet
I've never seen a "toilet direction" app. Apps are pointless to the user that doesn't need them - to those that do, they are invaluable. As for cost, more than half the apps on the iPhone are free, and of those that cost, the vast majority are less than a pound (the majority are less than a single MP3 from iTunes)
Unless you go into the settings app to look at the phone information, it is imnpossible to tell a 3GS from a 3G, so being "cooler in the eyes of the cool kids" would be hard
I don't know anyone that is so pathetic to "laugh at someone for having an out of date phone", nor do I know anyone pathetic enough to actually care if they did! You seem to be pretty worried about it tho? My 2G iphone was out of date by 2yrs when I changed it, but never in that time was I ever "embarrassed" to take it out of my pocket in front of anyone for fear of being laughed at