3g was just starting to become apparent then not everyone knew what 3g was at that time.
You're thinking of 3G dumbphones.
Almost every American smartphone at the time was 3G.
Secondly, much of the rest of the smartphone-buying world had been using 3G for years, and some had trouble finding EDGE coverage for the first iPhone.
Apple purposely launched an EDGE only iPhone in 2007 purely for test purposes so if iPhone was "success" they could cheaply "update" to iPhone 3G (2008) with practically zero costs in terms of R and D which they did for huge profits.
Exactly. Apple launched without 3G primarily to save on R&D, chip and licensing costs... along with critically being able to negotiate a less expensive data plan for buyers. Battery and lack of coverage were secondary reasons.