Ryan at Engadget says they've been chatting up one of the divinely chosen to lay eyes on the second-gen iPhone, and they're claiming a couple details we haven't heard before, as well as the by-now familiar: 3G and real GPS—expected, and hoped for. Metal backing out, glossy black is in, with chrome volume buttons, which should help with signal issues. It's also a little fatter (probably cause of GPS and battery, which still isn't removable) but you can toss your stupid headphone adapter. The screen is the same size and res (we'd heard they were trying to move to plastic, but doesn't seem to be the case). He's guessing it could ship in July. Update: To be clear, neither us nor Engadget were claiming that this is an actual pic, just illustrative (besides, it's a few weeks old, see the in-body link). [Engadget]
I think they certainly have to be adding more than just 3G in order to get people who bought 1st gen to buy the 2nd gen too.
If they add all of these features:
5 MP camera
Non recessed headphone jack
That might make a first gen buyer upgrade, but if there were only a couple of hardware updates, people will probably stick with their first generation phones for a while longer. Especially when you consider that they will get the same software updates as the 2nd gen owners (with the exception of software that requires the new hardware).
So, I predict Apple will add at least 5 of the hardware upgrades listed above in order to get some of those early adopters to re-adopt.