I have a 4gb iPhone and I don't plan on upgrading. I don't use the EDGE network enough to care about how fast I can download stuff. The biggest benefit is the App Store, which is going to be available to all iPhones, not just the new one. I would wait for the next iPhone if I were you. Why pay $10 more per month (over 2 years it is $240) when you have a perfectly capable phone?
here's an article about an upgrade for current users. Explaining the iPhone 3G Upgrade Options
and no one will know what the future iphone pricing will be like but if i were you i would wait to upgrade to the next generation, not the 3g. seeing how apple is, they'll probably offer something better withint a few months of 3g release...
Apple will without a doubt offer a mildly improved 3G iPhone in about 6 months that has nothing but more memory. I wouldn't wait for that personally. If I was going to wait, I would wait until the actual 3rd generation iPhone that is bound to be released this time next year.
If Apple continues their usual trend, that will be the one to look for.
I anticipate an updated iPhone 3G in the next several months (I am thinking sometime in Feb). As for upgrade price, there is not one. It is firm at $199 and $299, and that is only if you qualify for the upgrade price. Check e-mail and you will get a good idea on how much it could sell for. Since it is harder to jailbreak the new iPhones, there is still a market for the old iPhones