After looking at images released of the new iPhone, iPhone 4, the biggest difference in design that I noticed was Apple's switch from the smooth, round edges on the phone to square ones with a flat back. This is one of the biggest changes Apple has ever made in the iPhone design (besides making it slimmer and smaller).
What's caused this change? The biggest reason I can think of is product differentiation. It makes SO much of a difference. Everybody will know you have the new iPhone because it's a completely new design. Suddenly, the sleek-looking older iPhones are not so sleek-looking anymore because their rounded edges say "outdated" rather than the once "brand new". It's quite possible other smartphone brands will soon follow suit (I'm talking to you HTC and Blackberry).
Another reason: the Droid phone. When I first saw this phone, I really liked it. Its design was extremely aesthetically pleasing, and I was constantly on the look for alternatives to the iPhone, and this was a great one. It really did make the iPhone look outdated. I'm sure Apple is trying to compete with this design.
This happens a lot with design. Women's heels on high-heeled shoes go from thick to thin. Same with toe shapes: pointy toe, square toe, round toe, open toe. These all indicate whether you are up-to-date with the latest fashion or not.
Fashionably it's a lot easier to keep up with the trends. Technologically, it's a little bit more expensive.
What I say: if it still works fine, then keep it.
Unless you want to look like an idiot of course.