Why would it correct the performance issues? Each release is going to introduce some new features, and of course bug fixes. Apple isn't known to increase the speed of their OS dramatically with new versions. That facts are simple. 4.x is the last version any 3G will be getting and it's time to upgrade. Try a fresh restore to see if it alleviates the performance issues. If not, well, you only have one viable choice.
Originally Posted by BLiNK
The fact that Apple still supports that model says a lot about them. Find me another top phone manufacturer who supports their older models from a couple of years ago that can run the latest OS version, albeit a limited one.