_+*Possible solution for 3G*+_
I experienced many of the issues listed in this thread on my 3G after updating to 4.2.1 (reduced battery life, sluggish GPS, 10-20sec delay for camera shutter, crashing SMS, sluggish keyboard, poor app performance, inability to answer phone calls, etc, etc). Turning off Spotlight didn't work, nor did reducing mail polling. However, last week I did a full backup followed by a DFU Reset and restore from backup (took about 3 hours), and so far my 3G is performing MUCH faster (although not quite as fast as iOS 3.x was, oh well). Anyhow, here's the steps I took.
_+*Here's the basic steps:*+_
*1) BACKUP your phone.*
Don't interrupt or skip this step. Basically, just plug your phone in, start iTunes, and click 'Sync'. After the sync is complete, verify that a backup has been made by going to the 'iTunes Preferences > Devices' and verifying that a backup instance exists.
*2) Do a DFU Reset.*
+Warning, this will wipe your iPhone, so be sure to do Step 1 so you can restore your data.+ Detailed instructions are available at
http://www.ismashphone.com/2008/08/recovery-dfu.html . The trickiest part here is the releasing of the +Power Button+ while holding the
Home button. Be sure to follow the directions
exactly. If anything feels like its stalling, just wait it out. It may take several hours to complete the process. Make sure your laptop is plugged in and iTunes stays open.
*3) Restore settings, data, and apps from Backup.*
When the DFU reset is complete, select the backup instance you created from Step 1 and the backup will begin restoring. Again, for 16GB this took several hours.
*4) Re-apply app updates.*
On your iPhone, go to App Store and click 'Update All' to update all your applications (since restore may not restore all the up-to-date app patches).
_+*Good luck.*+_
If my phone slows down in another week or so, I'll post back. But so far, so good.