Just thought I'd throw my 2pence worth as im in the same situation, and have decided on the 3gs after much research.
The compass is actually a more advanced feature than you may think and prove a huge advantage with applications they'll produce for the IPhone in the future. In effect it's not just an app that can navigate you to North if your lost on the south pole, far from it it's actually a completely new bearing or axis if you like that the IPhone can sense.
What the heck am I talking about? Well for example there's a Wimbledon App that apparently can sense when you point the phone at the direction of any tennis court at wimbledon which is play. When you do this displays all the court information, score, and all the stats basically in real time for it. (I can imagine this being developed so it can be used in certain shops in the future)
However this feature will only work on the 3Gs as with the compass it 'knows' which way the phone is actually facing.. thus it becomes much more than just a 'compasss'. Yes the 3G has GPS, and knows where it is in the world but not which way it's facing... it could be upside down for all it cares!
There's even talk of a app being developed that's similar to google street. Ie if u visit a town u don't know and point ur IPhone in the direction of shops or a road, it can display the actual map with the shops, restaurants, beaures whatever it is all with there telephone numbers, there menu for restaurants etc... all fed from Googles huge database that it's allready building online for google maps.
Again the compass will be invaluable to this and wouldn't work on the 3G IPhone. Ok so these kind of apps may not be being released tommorow, but 12months down the line they'll certainly be on the cards or even sooner - and you may end up regretting not going for the 3Gs by then. (minimal 18month contract unless you buy it out right off course!)
So bear that in mind in the future when they start releasing even more advanced Apps for the Iphone... I without a doubt am going for the 3Gs just for the compass alone! But as you can see there's huge potential for it and how the Iphone can use it. Hope that helps ur decision.
