| The original iPhone uses EDGE (2.75G) data service, battery life rated at 8 hours, has an aluminum back, gets location on Google Maps using WiFi hotspot or Cell Tower triangulation, had a dock included in the box, and the AT&T service contract is $20 per month for unlimited data and 200 text messages in addition to the chosen minutes plan.
The iPhone 3G uses both EDGE and UMTS/HSDPA (3G) data service, battery life rated at 10 hours using only EDGE and 5 hours using only 3G, has a plastic back, gets location on Google Maps using assisted GPS, does not include a dock (a $30 option), and the AT&T service contract is $35 per month for unlimited data and 200 text messages in addition to the chosen minutes plan. The audio speaker has been improved, and the headphone jack is no longer recessed.
Those are the basic differences.
The iPhone 3G can download a webpage about twice as fast as the original iPhone, but drains the battery twice as fast doing it.
3G refers to 3rd Generation data transfer rates or what is known as high speed service.
The original iPhone uses the EDGE data service and is considered 2.75G.
The iPhone 3G uses UMTS/HSDPA (high speed) and defaults to EDGE service when not available.
For example: it might take 60 seconds to draw a web page on the screen using EDGE service, while the same web page can be drawn in 28 seconds using UMTS/HSPDA (3G) service. | 
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