I'm sorry, but I'm reading some of these posts and it's ridiculous. I am not an Apple hater, however, I'm also not a blind follower from generation y.
People were sold the 3G phone in retail stores by ATT&T and Apple less than 1 year ago. If it's an inferior product that will knowingly not support the operating system, then it's criminal on the part of both of these companies to even sell the phone, let alone for ATT&T to lock people into contracts with it.
Ths bottomline, corporate greed mandates that every consumable product sold these days needs to be disposable. Nothing seems to be made to last, and everything is made to be obsolete from the day you own it. It's incredible how the younger generation, that has grown up with this mentality, just has no clue why there's something wrong with that.
The problem with the OS started around the same time the iPad emerged, and 4.0. Clearly the hardware requirements of that device is considerably different then what a dedicated first generation 3g phone can handle. The code used to create it, though different, is not THAT different. The devices needs to be more powerful in order to run the OS. It's really that simple.
I believe that ATt&T should offer paid upgrades to all 3g phone users regardless of contract expiration to make this in the ball park of right. But, everyone will be better off either waiting until the new iphone release comes, making the 3gs obsolete as well, or just jump to the Droid and Verizon 4G network as many people that I know of have done.