Just to expand a bit...
There are a few different generations of mobile technology.
The first wave of mobile phones (the bricks) are 1st generation.
Then along came the 2nd generation, where they became really popular (digital handsets, etc.).
The future was 3G.
As a way of filling the gap, other technologies emerged (most in use now), like EDGE mobile internet, that kind of thing. EDGE is what the first iPhone had.
3G is the next wave, which is faster and more like home wireless internet.
So, the iPhone 3G has faster internet access when out and about, because it's using newer, faster technologies, which together are called "3G".