You can't get meaningful stereo separation from a 5" device. It serves no purpose.
Never said it was "HiFi", but it does make a big sound difference, Bold owners know it. You can hear the separation as it "throws" each channel left or right. Vocals come out of the top. I use a 3GS too, but the work bold 9000 sounds way better without headphones.
Apple wants to be a leader, but always has to save "some features" for the next years phone. I'm dissappointed by not having them include stereo speakers on the new iPhone- or the iPad for that matter. One of the reasons that I bought the 17" MacBook pro is the speakers, best besides a Toshiba Quizimo- but who would buy a PC for personal use...