I have the original iPhone but its on V3.0 so it should act the same as your 3GS. It works fine with the handsfree but the sms reader doesn't work. Also if you wanted to play music you would have to get a USB dongle as the iphone runs on its own operating system and hides the files so the car can't read them in the same way a memory stick. I think a few people have had some funny microphone glitches. I think that about covers it.
I got a iphone 3g today, mostly coz i'm too impatient to wait for the 3gs to become available so i'm going to have to try and pair this up with the grande tomorrow!