It feels like running 4.0 for the most part on a 3GS but then there are parts where the OS just gets glitchy and it really sucks. In other words, its not like the 3G on 4.x
It works fine on the 3GS: There's very little difference in the internals of the 3GS and 4 (more memory and a slightly faster processor in the 4 and the processor speed is mitigated by the 3GS having 1/4 as many pixels to push around as the 4 does) so it's to be expected that it will work well. There is far more difference in performance between the 3G and 3GS than there is between the 3GS and the 4
3GS is actually faster at times, this is due to the device having to push less pixels to the screen which basically negates the minor CPU clock speed difference.
It is quite laggy on 3GS and 4 though, I put this down to lack of optimization and various Apple diagnostic tools working in the background of beta
It works just fine. Some lag at times, but very manageable.
I have my iPhone 3GS jailbroken with redsn0w on iOS 5 and it is just fine. According to SBSettings, my phone is averaging around 110mb of free ram, whereas it would average around 130mb of free ram on iOS 4.2.1 jailbroken with redsn0w. I have the same tweaks and everything on iOS 5 as I had on iOS 4.2.1, so there is no variable there.