Whatever you do DO NOT buy a 3GS no way no how. Just do not buy a phone thats older than I am. It's almost two years old and will no longer be supported by apple in 6 months.
Anyway Android is the operating system of the phone, it's fantastic it really is and it's popularity is exploding, so don't worry about that. Also what's great is you can pick a phone to suit you. So any size screen, or a physical keyboard, you name it there is a handset to suit you. Android is so customisable, so if there is something you don't like you can go get an app to replace that function, it's open like that. You can change what you like.
So you marry the two together and you have your phone. Like you buy a PC and windows runs on it, you pick a pc you want and know windows will be on it.
As for the iPhone it's more expensive for no reason. But it's simplicity is its selling point. you get what they give you but they put a lot of time and effort into making that experience excellent. But it is one size fits all and you have to get the iPhone 4 if you are getting an iPhone.
I say again do not buy that old 3GS. Plain do not do it.
I would recommend you go buy a brand new Google Nexus S. It's the newest phone on the planet and once you see a movie play on the screen you'll be smitten.
So basically the only difference is the OS??
What about apps on the android OS? The major reason i want an iphone is for all the apps that are available - theres thousands of them if im not mistaken. Does Android have this?
Also...you say no way to getting the 3GS as it will no longer be supported by apple? How so? Im under the impression that even the original iphone is still supported by apple in terms of updates and apps.
What is the difference between iphone4 and 3gs...apart from slight difference in shape and a new camera?
What does the nexus S have that the iphone doesnt, apart from android obviously?
So many questions....