I have a 3Gs but I have no plans to mount it on the bike: haven't seen a sleek-enough mount yet and it seems stupid to put something with a glass screen, no shock absorption, and that can't withstand a 2-3 foot drop onto a bike and then fear crashing and being out ~800 bucks.
There are a few nice cycling apps out there, google search shows up some reviews and comparisons, but fundamentally, the best use I found for the iPhone is in a ziploc bag in my jersey pocket, to be used only for getting occasionally un-lost, listening to music (using the inline remote/mic on the 3Gs to control everything) and taking calls.
It still isn't a bike computer like a 705 is because you don't have ANT capability, and if you want GPS on your ride, just get a cheap Tomtom or Garmin that won't give you a heart attack when your front wheel washes out or a triathlete brakes suddenly in the paceline.
S2
Bianchi Pista Concept