iPhone 3G S
CPU ARM Cortex A8 @ 600 Mhz (max 833Mhz)
256MB RAM
PowerVR SGX Graphics chip (can do 720p video but stays a 640 x 480)
3 Megapixel camera
Bluetooth 2.1
iPhone 3G
CPU ARM 11 412 Mhz
128MB RAM
PowerVR MBX-Lite graphics chip
2 Megapixel camera
Bluetooth 2.0
There is actually a lot more different going from the 3G to the 3G S than there was going from the 2G to 3G.
Internal hardware changes comparison
Connectivity performance is the same and will still be limited by AT&T here in the US. Verizon should be available for iPhone in 2010.
Rob