Over on ubergizmo they take the new game Iron Fist Boxing 3 for a spin and get a quite obvious introduction in the differences between the iPhone 3G, which only implements OpenGL|ES 1.0, and the iPhone 3GS, which supports the newer OpenGL|ES 2.0 . The newer implementation supports things like shaders and a programmable pipeline, which they implement in features like shadows, bump maps, motion blur, and bloom. The results are a much more visually compelling game (as evidenced in the screenshot).
Head on over to their site to see some video of the differences as well.
Iron Fist Boxing 3 – Iron Fist Boxing 3 on iPhone features GL 1.x and GL 2.0.