Dr Sly; Thank you for your response. To better help anyone who is curious about this, most every device within the IPhone 3G, the CPU, radios, some amps, etc. have a pin on them that is called "reset". What this pin does is when it is driven active (to ground in most cases) all the internals (registers) within the device get set back to their default values when they were first powered up or first programmed. Many devices also have the capability to run at lower voltages and to have their clocks shut off to save power.
A "hard reset" resets most all the hardware devices (CPU, GPU, Raidos, etc.) to their default states and the CPU starts code execution at it's default startup address. When you power the IPhone 3G "off", by holding only the sleep/power button, it causes many of the devices to have their voltages lowered and their clocks shut off, which saves power. When you turn the phone back on, they simply have their voltages raised to normal operating levels, their clocks turned back on, and they are in the same state they were in before you held the sleep/off button.
So, the difference is that holding the sleep/power button only reduces the power the devices use, and when powered back on the phone is in the same state as it was when you powered it off. This is similar to what is called suspend to ram, which is supported in most laptops today. When you hold down both the sleep/off button and the home button this cause all devices to be reset and to start up from their default states. Any volatile memory will be lost in this case. This is what prompted my question.
Thanks again for your input.
The Omega