It's very frustrating that so few people actually seem to
read these threads. Instead of posting "me, too" after "me, too" reply, you would know that completing a double hard reset fixes the problem.
After conducting two hard resets of my 3G, the only sluggishness I experienced was when I activated the phone from standby. There would be a delay and occasionally the pass code lock keyboard wouldn't appear unless I went back into standby and woke the phone again.
This problem was caused by memory use. The new OS takes up significantly more memory than the OS 3. My 8GB phone was maxed out after the upgrade. I went into iTunes and deleted about 1GB of songs to provide the OS with some headroom.
The phone is now working flawlessly. My wifi kicks in after standby much faster than before. Swiping through screens of apps is much snappier than with 3.1.3. The folders have allowed me to consolidate seven or eight screens worth of apps down to two pages (one with my frequently used apps, and one with folders containing all the rest). I can live without digital camera zoom; digital zoom always looks terrible.
I too was frustrated immediately after installing the new OS. But your upgrade isn't finished after the installation. Do a double hard reset of the phone and carve out a little free memory. If this still doesn't work, you have issues with your phone or installation unrelated to iOS 4.