Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 2_2 like Mac OS X; en-us) AppleWebKit/525.18.1 (KHTML, like Gecko) Version/3.1.1 Mobile/5G77 Safari/525.20)
I agree with previous posters that a 4 GB iphone is too small to get an apple experience. A few apps , music and 1 movie is pretty much all that will fit. It's possible with some juggling but not ideal.
Things have changed since the original iPhone intro. Then, it was an iPod, a Web Browser, and a Cell phone.
1) More, Faster bandwidth availability
2) The iTunes Store
3) The App Store
4) The Apps, themselves
One big change is the way we can now use the iPod-like features. We no-longer need to "stop for gas" (tether to the computer) to get new content (or get access to old content). The businessman doesn't need to store all his business content on the iPhone, because he can access whatever, whenever through the cloud. The same is beginning to happen with the consumer and his need for iPod content-- store a few immediately-needed songs/videos on the iPhone, then access the rest on demand.
Another change is that there are some apps that can be done better or are more suited to an iPhone than any other device... say you are 5th in a long checkout line and you realize you don't have enough money in your checking account to cover your purchases... you notice that there are long lines at the ATMs, too! Just whip out your iPhone and transfer from your savings to checking... ...sure you could do this with your laptop (if you brought it shopping with you and did a balancing act with it). I do this all the time.
Then there are the game apps... ...they change all the rules.
We have 4 iPhones (3 8-GB 2Gs and 1 16-GB 3G) and lots of iPods. Only 2 of the iPhones act as cell phones. Typical memory usage is about 1.5 gig of apps and total usage less than 3.5 gigs.
The 2 non-activated phones are used, primarily, as game machines. The iPods are seldom used.
So, 4-GB isn't, necessarily, an issue.