Hi Ruffy,
I use an adapter with my iphone since my ipod tunes are all on it. I also like to listen to pandora so it works nicely. Do you want me to look and see what kind of adaptor it is?
I would recommend the 4s since it's so much faster and has a ton to offer. And of course you get Siri.

Your app choices are so vast it's hard to recommend something without knowing all your likes and dislikes. I have tons of games on mine since my girls are always playing them on the way to school. I also have food apps, art apps and science apps. I'm a bit app happy at times!
Do you have an Apple store nearby? It's nice to go in and chat up a family room rep so they can help you pick out what would work best for you!