If you have an iPhone 3G, do yourself a favor and go to school on my experience: iOS 4 is not worth trying to install unless you hate yourself and your time is worth nothing. So much of the new coolness depends on the hardware (video capture, front facing camera, autofocus, hardware graphics acceleration, Bluetooth keyboard support, enhanced voice control) and, more importantly, the thing is built with the newer phones in mind so you can expect to drag just as much as in version 3.1.3.
Basically all you’re getting is folders, a unified inbox for mail, and iBooks. If you need that, go right ahead. Otherwise, save yourself and pick up the $99 3GS.