It will be quicker, or operate properly unlike previous versions, but the main feature of video calling is useless as its dependent on wifi. Wherever you have wifi your going to have your laptop most likely and it is limited only to other iphone 4's? thats rubbish.
The main problem with the iphone 4 and all previous iphones is the viewing size of the screen, far too small and makes viewing the web impractical and a waste of time.
If they wanted to really advance it make a 4 or 4.5 inch screen on it then you could actually use it for decent web browsing. But they will probably do this a few months after you have all shelled out half a grand for something you already own essentially because steve jobs told you to and you are his cult slave.
lol
The difference between both phones:
1. The screen. It has 4 times the resolution making it by far the BEST screen on a mobile device. Add IPS technology, you get much better viewing. Add a higher contrast (4 times the contrast of the previous phone) giving brighter whites and darker blacks at the same time, you have an all-round better display.
2. FaceTime is not useless. Many of us have wifi at home and work and school. The only time I never have wifi is when I'm on the move. It's cool but I don't think it's the greatest feature of the iPhone... the screen is.
3. The camera. The quality of the pictures is much better than most phones. The 3.2MP camera on the previous generation was better than the 8MP camera on my previous LG Renoir. Now add BSI technology that makes picture quality great in low-light, LED Flash for even better pictures, more megapixels without reducing the size of the sensor's cells (making for thus removing the deterioration that comes with cramming more pixels), I'm not surprised picture quality rivals stand-alone cameras from 2 years ago now.
4. Video: Well, need I say more, with HD recording and complete editting control right on the device. Things like these will change the concept of mobile blogging. I can report something I see with a high quality video, all editted within minutes of an event.
5. Call quality: Let's not forget that a phone is a phone. The iPhone was NOT the best phone in the world... in fact it was a below average phone for making calls. The smart new design: the new antennas, glass back etc will improve signal quality significantly, so finally we can actually MAKE CALLS. Add to that, the noise cancelling (or as they say, suppression) technology you expect from the VERY BEST phones that appear in 2010 and beyond, it should be a delight making calls on this device.
6. Better 'awareness': with a 3-axis gyro against the simple accelerometer, watch out for a new generation of AMAZING games that are sensitive to motion on all axes. The gaming experience is bound to improve sharply on this new device.
7. Battery: Now, this is the biggest reason why I'm upgrading. The iPhone becomes so integrated into one's life... everything from staying on top of communication, listening to music on the go, running apps to make things easier, organization etc. The iPhone 3GS struggles on battery. I found myself barely making it through the day with a charge. This changes with a larger battery and a smarter (yet more capable) low-power chip. Just adding that extra hour or two of heavy usage makes a world of difference.
All-round, this is not a small incremental upgrade. And as if all that wasn't enough, you have this all in a phone that is 24% smaller with a much more sophisticated design that looks solid and stylish.
Now you mention the screen being too small. This is a handheld device. I do NOT want a larger phone. I want something that fits better in the palm of my hand. I would count having a 4.5" screen as a negative against a phone! The larger phone while not really doing anything for me, also drains battery faster. Resolution is more important than sheer size. Clearer pictures are better than large blurs. The only acceptable change to the screen in the future might be maintaining the width of the screen (which I think is the perfect size to fit in a palm) and changing the screen aspect ratio from 4:3 to 16:9. This however, isn't straightforward because of the impact on apps. I'm not sure I fancy having black lines at the top and buttom of my screen in older apps with a smaller aspect ratio.