It is twice as fast, but changes to AT&T rate plans make the iPhone 3G more expensive than its predecessor.

The first iPhone was still hot off the press when rumors of a 3G model began to circulate. Fueled by the prevalence of 3G networks outside the United States—and the comparative pokiness of AT&T’s EDGE network—the speculation has finally come to an end. With iPhone 3G, Apple built a 3G-capable handset, and threw in some sweet extras to boot, including GPS, near-instantaneous over-air data syncing, and awesome—although sometimes frustrating—goodies like the App Store.

The iPhone 3G maintains a similar form-factor to its predecessor. Despite the addition of GPS, the 3G weighs in at 4.7 ounces, about a tenth of an ounce less than the original. Of course, the original’s metal back has been replaced with Apple’s signature shiny plastic, in either black or white. Unlike the original version, the iPhone 3G is tapered at the edges and bulges out slightly along the middle. Other than that, the two are nearly identical, although changes in the shell will make compatibility with some older iPhone accessories, such as docks or cases, problematic.

On the inside, the 3G sports a 3G (duh!) radio and some new GPS tricks up its sleeve. Apple’s been touting AT&T’s 3G network as being “twice as fast” as the older EDGE network, and our tests bear that out—with a catch. The newer network is certainly faster, but even with AT&T’s recent build-out efforts, the coverage areas are notoriously spotty, and far from nationwide. If the 3G network is a compelling feature for you, it’s worth the investment in time to see if 3G coverage is available where you live and work.

The other big new feature is GPS. Via Apple’s Core Location, the iPhone can make your whereabouts known to applications on the phone. In our testing, GPS reliability was a tad flaky, sometimes locating us in seconds, other times taking several minutes, even in areas with strong network signals. Powering the phone down then back up often cleared up GPS sluggishness, but we’re hesitant to give the iPhone 3G a pass in this area, since onboard GPS is one of the phone’s big selling points. While some of the GPS-based social networking apps sounded cool in theory, until they reach critical mass, they suffer from the Alexander Graham Bell problem. When you’re the first guy with a telephone, there’s no one else to talk to…yet.

Which brings us to the App Store. Within days of the App Store’s launch, we found plenty of useful—and delightfully useless—iPhone apps, a selection that grows daily. Everything from games to productivity apps to tip calculators is available in the App Store, although small glitches in a few apps forced us to become intimately acquainted with the iPhone’s hard-reset function (hold down the Home & Sleep/Wake buttons until the Apple logo reappears onscreen). While Apple’s walled-garden approach to selling apps is meant to keep out bad code, it also reminded us that the vetting of each app individually and the inability to beta-test applications widely before release means that some buggy App store selections suffer from lack of testing and slower update cycles.

Battery life on the iPhone 3G was about what we expected—and nothing to get excited about. Under heavy 3G, GPS, and gaming usage, we found ourselves having to re-up the iPhone’s internal battery every day in the early afternoon. Under more normal usage, a nightly recharge gave us enough power to last most days. Turning off the 3G radio upped our battery life considerably, although at a cost of one of the new phone’s key features.