I have an outdated iPhone 3GS, so why am I on the fence?
The main downside to this new phone is the lack of LTE/4G. The area I live in has Verizon "4G" and it is a much faster system than the 3G limits on the new 4S. I would have loved to see a bigger screen, too.
Both of the above features would have been forgivable if the cell companies had a 1 year contract and I could update to the iPhone 5 in a year. However, most contracts are for 2 years, so it is a long commitment for a technology that I use every day and is already outdated to some extent.
I have not made a final decision, but I am leaning toward waiting for iPhone 5. However, it will be difficult, since updating would also mean that I could move from AT&Ts network to Verizon or (most likely) Sprint.