SERIOUSLY. Ive hated having to pick and choose which music I have with me, and w/ 64GB, I will have plenty of room for a much wider selection of albums. AND apps. And photos, and videos. It's a huge factor for me.
Other reasons? Much faster all-around unit, better antennas, twice as fast data speeds, better camera, and yes, Siri, which I am extremely excited about and I think represents the next big step in human-computer interaction. Underwhelmed, I am not.
Gruber of daringfireball.net had a great link to a comment about why the screen is the size it is. It's because Apple feels that 3.5" is the RIGHT size for a smartphone screen. Why? Pocketable without issue, but here's another thing I hadn't thought of and is oh so true: When used one-handed, your thumb can reach ANY part of the screen without straining. Say that about a 4"+ screen! Just another sign of how much THOUGHT Apple puts into their designs.