I've noticed that it sounds different, maybe fuller compared to my old 2g, but i wouldnt say its a bad thing. It is definitely louder though, a lot louder. I'll have to pull my 2g out and compare, but i have no complaints over the sound quality.
EDIT: okay so i just compared the two, with it at full volume i hear what you mean by the distortion of it. I think this is due the power of the speaker, it almost sounds like the amplitude of the sound vibrates the speaker or maybe the whole phone a bit too much. i took my 3GS and lowered the volume until it matched the full volume of my 2g (which it took getting down to 4 bars to do so, thats crazy) and they sound the same when at the same volume.