We already know that the iPhone 4 will have the same processor as the iPad, but if the report bears out it'll also accommodate twice as much memory. That means developers can keep more data cached and manage graphics changes more effectively, and that you'll be able to browse without the iPad's often frustrating refresh times. The memory boost will also enable smoother multitasking and is likely why iMovie won't come to the 3GS.
We'll know for sure in a week (or less) what the actual number, but given how many of the iPhone's competitors have 512MB, it'll be a big disappointment if the iPhone 4 hasn't kept up with the Joneses. [MacRumors]