2 years ago the first iphone appeared with more publicity than anything had seen before and people rushed out to have the shiny new phone. A year later they all rushed out to upgrade to the 3g version which is the unit I waited for as I thought Apple had done a reasonable job on the first unit but the second would be worth the wait.
Now 3 years later they have launched the 3gs with a faster processor and able to do video recordings. Personally having upgraded the software to iphone 3.0 I am still in love with the 3g version and see no point in rushing with the herd to the iphone shop to part with more cash.
However next Summer when they launch the 4th version with video calling etc, large memory and the networks are starting to upgrade from 3g to 4g capabilities well then I will be at the first of the Q camping out like you would see people who que up for days to get a ticket to see their favourite rock band!!
The cpu is branded as a little bit newer model number however it and the GPU are most likely the similar pace as the 3GS. The old Touch using the same Processor and GPU since the 3G was faster. Besides having the clock speed turned up higher the Touch has much less software to run because it is not a phone. It should beat any iPhone to this day in overall performance.