Your device is slow because apps are constantly triggering low-memory conditions. Memory was very tight on the 3G, even before iOS 4. This is precisely why multi-tasking isn't enabled.
Safari alone is consuming most of your device's memory, by a very large margin. It stays resident in memory when you return to the home screen, and it's one of the last apps to be killed in low-memory conditions. The problem is that much worse if you do a lot of browsing on your iPhone or iPod; Safari just grows and grows. This is why the problem appears to be fixed when you reboot your device.
Here's the tip: You can quit Safari by closing all of its tabs and then returning to the home screen. You should do this periodically; I did this whenever I was finished with a browsing session. With Safari out of the way the rest of the software on your device should run at normal speed without triggering any low-memory conditions.
My primary devices now have 256 MB of RAM instead of 128 MB, and I no longer have to worry about Safari's memory consumption.
You can also kill Safari (and all other running apps) by holding the sleep button until it shows the slider screen, and then hold the menu button until you get the home screen.
You can also bring up the task tray, press and hold the icon for safari(or any other app) like you would for moving apps on the home screen, then press the - sign that appears to close it. Discovered it by accident, but it's quite useful.
Safari alone is consuming most of your device's memory, by a very large margin. It stays resident in memory when you return to the home screen, and it's one of the last apps to be killed in low-memory conditions. The problem is that much worse if you do a lot of browsing on your iPhone or iPod; Safari just grows and grows. This is why the problem appears to be fixed when you reboot your device.
Here's the tip: You can quit Safari by closing all of its tabs and then returning to the home screen. You should do this periodically; I did this whenever I was finished with a browsing session. With Safari out of the way the rest of the software on your device should run at normal speed without triggering any low-memory conditions.
My primary devices now have 256 MB of RAM instead of 128 MB, and I no longer have to worry about Safari's memory consumption.