What I do NOT expect, however, is for a massive performance hit from an OS update that is claimed to be compatible with this device.
Apple already admitted that there was a mistake in the iOS4 release that affected the older handsets. It's officially listed as one of the major fixes in 4.1. What else do you want? It's a shame that they had a problem, but it couldn't have been a systemic issue with the new OS given how quickly it was fixed. It was most likely one or two services that needed to be tweaked that slipped by late in testing.
The fact is that Apple (and every other OS developer) is a no win situation with older devices. Performance will get worse overtime simply by the fact that the platform is still maturing with new services and API's being regularly added.
People would have been even more upset if Apple simply left the 3G behind at iOS3.