Then why 2G? Why not 1 or 1G? 2G doesn't make sense because of how many became confused calling the iPhone 4 the 4G. This was confusing for some who thought this meant it was 4G speed. Regardless, it's the original iPhone, not 2G. Even the edge iPhone would make more sense. They don't call World War I World War 2 do they?
It is called the iPhone 2g because it uses the second generation of mobile network (EDGE or 2.5G). Oh, and by AT&T standards, the iPhone 4 is 4G; it uses HSDPA, and not 4G LTE.
Shall we get back on topic. Its quite obvious that you'll never understand why the iPhone 2G was dubbed "iPhone 2G".