Higher resolution means smaller pixel size, which means a sharper picture. The iPhone screen actually isn't all that great once you see a more modern screen. On the Droid, for example, you can see much more of a web page at once and the small text is still readable because it is so sharp.
Yeah ok that makes sense. I also was thinking, with these new folders you probably will be able to see much clearer icons within the folder on higher resolution. I mean you already surprisingly can make out what apps are in the folders by looking at those little mini icons, making those mini icons higher res will only make it even easier, and make folders that much more convenient.