Note: These are my observations for iOS 4.0 on iPhone 3G only. Many features are only supported in iPhone 3GS and iPhone 4.0, most likely due to the hardware limitations.
Supported Features:
Folders
You can now organize apps further by placing them into custom folders. While in "wiggle" mode, simply drag one app on top of another. This will automatically create a new folder.
At least for the 3G, each folder can only contain up to 12 applications. And you cannot create subfolders within each folder (we tried, no luck). Although a bit limited, it is a great additional feature that should help clear up the clutter.
And if you're not comfortable setting up Folders on your iPhone, you can set up Folders within iTunes instead.
New Mail Features
The biggest new feature for Mail is that now you have the option to view your mails in all of your email accounts into a single unified mailbox.
You can reply, reply all, forward, and download images. You can even move mail from one account to the other.
In addition, by default emails are organized by threads. You can enable/disable this on Settings > Mails, Contacts, Calendars and slide on/off Organize By Thread.
iBooks
New addition, though frankly, this came in a little too late. There are already too many eBook readers online. Still, you do have the option to browse and buy books online, so if you are into that kind of thing, having the iBooks would be a blast for you.
Create Playlists
My personal favorite new feature!
Before, the only playlist you can edit is the "On The Go" playlist; you had to connect to iTunes to create and edit playlists. Also, if your existing "On The Go" playlist, if different from the previously synced "On The Go", will be updated to "On The Go-1", and so on. Quite irritating.
Now, you can now do this on the fly. Not just the On The Go. You can now create multiple playlists on your iPhone. On top of that, you can also edit any of your existing custom playlists.
All in all, a great improvement.
Photo Sharing and Copying
In Photos, you can now only Share or Copy at most 5 images at a time. The five-image limit prevents the memory leak issue experienced before when one tried to share/copy unlimited number of photos at a time.
When sharing large images (via email), you will be prompted that you can reduce the message size by scaling images down to Small, Medium, or Large. Or course, you can stick to the Actual Size if you wanted.
In case you wanted to send more than five images, simply Copy five images at a time then Paste them to your email.
Photo Places
Photos with geo-location data are now organized in the Places feature under Photos. You will be presented with a map (c/o Google). The locations where your photos are taken are marked with pushpins ala-Google Maps.
Location Services
Prior to iOS 4.0, Location Services can only be configured globally. Now, it can be configured on a per-App basis. That is, you can opt to enable it for Camera, and turn it off for everything else.
Safari Search Engine
The default search engine is Google. If you're tired of it, you can select Yahoo! or Bing instead.
More Secure Passcode Lock
The Passcode Lock can now be alphanumeric, providing even more security.
In case you still wish to stick to the simple 4-digit passcode lock, you can select that instead as well.
All of these can be set in Settings > General > Passcode Lock
Gifting Apps
The new Gift This App option is now available in App Store. After some experimenting, I noted that this option is only available in iTunes for applications which are (1) paid apps and (2) currently installed on your iPhone.
I haven't actually tried gifting an app yet. Anyone already tried this one out? :D
Expanded Spotlight Screen
The search feature of the iPhone now includes searching the Web (via Safari) as well as Wikipedia.
Other Features:
Messaging Character Count - now configurable on/off
Hiding Calendars (in case you sync your iPhone on multiple machines)
Cellular Data - now configurable on/off
Lyrics and Podcast Iinfo - now configurable on/off
Unsupported Features:
And now, we come to the more heartbreaking part -- the unsupported iOS 4.0 features in iPhone 3G:
Multitasking
The greatest and perhaps most hyped feature of iOS 4.0 is NOT supported in 3G. Oh well, that's it for the 3G then.
Orientation Lock
You can now lock the iPhone to portrait view. That is, it longer changes to the landscape view the moment you shift your iPhone a little to the side. This is a feature that is part of the Multitasking controls, so obviously this was a no-go as well. It would have been a great addition, though.
Customizable Homescreen Background
Just to clarify, there used to be only one wallpaper -- for the Lock screen. Now, there is the Lock Screen wallpaper, and there's the Homescreen wallpaper -- the background behind your apps -- and you can assign a different one for each page, as I understand.
Spell Check
The typical word processing application feature is not available in 3G -- or at least I haven't been able to make it work yet. Supposedly, when using any application, say, Notes, any misspelled words will have the familiar red zigzag lines under the words. So far, I've not seen it yet.
Digital Zoom
The Camera app still does not have the digital zoom. This is easily remedied by using third-party apps though, although quality... well, it's best left to the user.
Zoom while Shooting Video
Well, iPhone 3G is not capable of shooting video in the first place, so no surprise, zooming while shooting is another no-go.
Video Playback in Page
Supposedly, in iOS 4, videos will now play right on the page, instead of launching the video player. Still a no-go for iPhone 3G.
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