It is confirmed and unveiled, the new iPhone3GS will be enhanced with a slew of noticable upgrades and yes, 32GB option will also be available.

The "S" according to Apple's Senior Vice President Phil represents Speed and it will debut in US and some parts of Europe in 19th June, and more launches in July and August this year.

Here is a breakdown of comparison, credits to Engadget crew who was at Apple's WWDC 2009 where a comparison between the existing iphone3G and the iphone3GS was announced

 

                                  iPhone 3G
iPhone 3G S

Price $99 8GB ($299 for ineligible upgraders)
 $199 16GB, $299 32GB ($399 and $499 for ineligible upgraders)
Processor 412MHz ARM 11
 Unknown, "on average up to twice as fast"
Graphics capability
 OpenGL ES 2.0
 OpenGL ES 2.0
Camera
 2.0 megapixel fixed focus
 3.0 megapixel autofocus with macro mode and auto white balance
Video recording None 30fps VGA with on-device editing capability
Voice control
 None
 Dialing, music control
Nike+ support
 No
 Yes
Wireless technologies 3.6Mbps HSDPA, WiFi, Bluetooth 2.0 + EDR 7.2Mbps HSDPA, WiFi, Bluetooth 2.1 + EDR
Water- and oil-resistant finish
 No Yes
Integrated magnetic compass
 No Yes
Included headphones
 Standard Inline remote for music control
Battery life
 Up to 5 hours talk time / data on 3G, 10 hours on 2G

Up to 6 hours data on WiFi

Up to 24 hours audio

Up to 7 hours video		 Up to 5 hours talk time / data on 3G, 12 hours on 2G

Up to 9 hours data on WiFi

Up to 30 hours audio

Up to 10 hours video
Dimensions
 115.5 x 62.1 x 12.3mm 115.5 x 62.1 x 12.3mm
Weight
 133 grams / 4.69 oz.
 135 grams / 4.76 oz.

 

There is a guided tour by Apple as well, check it out here.