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FWIW, many report that iOS5 actually makes the 3GS faster. Anandtech ran some benchmarks that show the 3GS on 5.0 being faster than the iPhone 4 on 4.3 at many tasks!

I'm not convinced that you could run a 3.0 kernel image on a 386 without running out of RAM pretty soon, even if you cut it down to something pretty minimal. I haven't found any sources where anyone's actually installed modern Linux on one - they all seem to have used ancient distros because support actually vanished some time back (see eg. here: http://hackaday.com/2011/08/12/installing-linux-on-a-386-lap...).

I stand corrected, but you have my curiosity up. Nevertheless, the "decline" of hardware in the face of software advancement in phones strikes me as awfully rapid. Is the Nexus One really so underpowered that ICS couldn't be made to accommodate it?

the 3G is 4 yr old. the Nexus one is only 1.5+ yr old.

here are two issues:

1) Android is suffering from feature creep / bloat

2) Unresolved design issues are biting them in the ass