4S
What sucks is you are in an odd-numbered year to upgrade. This is the "s" cycle. I expect the redesigns and the greater leap to happen next year. Like I said before, Steve Jobs probably did work on the next iPhone alot more and this year was just a spec bump. It takes at least a minimum of two years to plan it out for the bigger projects. I bet when the 3GS was announced in June of 2009, the iPhone 4 was already halfway in development.
But coming from a happy 4 owner, I say always go for the better specs. Yes, these iPhones will all be part of the discount bin next year and a year after that, and Apple will either milk you with storage space or iCloud. Apple tax. But always go for the higher spec phone. iOS5 works great on the iPhone 4, but wait for the next update. Just like when iPhone 2G got to 3.0 and iPhone 3G got to 4.0. It got really bad.
Go for the 4S when it still has value. Then if you can sell if off next year, you get more than say if you got a 4 with just 8 GB. I would be telling you to wait if the next keynote comes around. But at this early stage, 4S still has time. And time = value with these phones before they all become obsolete and be part of the discount bin.