Normally I give this advice:
Your situation is a little unique though. Parents pay for the plan, and the hardware is out of your own pocket. So, my advice is, do what you can comfortably afford, and think about what else you can spend any saved money for. On first blush, it sounds like the 3GS is the right choice for you.
By purchasing an iPhone, you are committing to a minimum of 2 years of voice and data. That's about $1600. Do yourself a favor and enjoy that expenditure on the best hardware possible by dropping $100 more on the latest and greatest. And the iPhone 4 is substantially better than the 3GS.
Your situation is a little unique though. Parents pay for the plan, and the hardware is out of your own pocket. So, my advice is, do what you can comfortably afford, and think about what else you can spend any saved money for. On first blush, it sounds like the 3GS is the right choice for you.