the main thing they are talking about is that it enables you t do video calls. They call if Face time. plus you get more time per battery charge and there is more space for apps and music or anything else you want to put on it. There is also a folder feature, you can drag apps into each other and it automatically creates and names the folder.
Im pretty sure that with the new iphone 4 you can have video chat, so its like calling someone while seeing them when your talking to them.... i hope that helps.