what's better about it? The only thing I spotted is the 5MPx camera, and Android if you're into that..
the rest is pretty much worse, most of it is worse than an iPhone 2g that has 4gb of NAND flash.
But in the end, it's all subjective, no one really cares which one is actually better than which, they're all thought for different people with different necessities, it's all about choices and preferences.
Some absolutely better than an iPhone would be as solid as a 3gs, better everything(camera, ram, cpu, storage, antennas), resolution independence giving the user a choice, if one wants to browse the internet at 320x480 let him do that, if he wants to view photos/videos at 840x640 or whatever let him do that.. a bit science fiction I know...
as far as ergonomics go, keep it almost identical to the 3gs, simmetrical as well, a slightly bigger screen but keeping some space for the hands to feel comfortable keeping the thumbs on the sides in landscape mode.. OLED is useless, or at least worse than the iPhone's LCD, in direct sunlight..
Hard ti believe, but for many, the iPhone is close to perfect right now and what I described can simply just be the next iPhone..