Yes if you have a T-Mobile DATA plan, you can use EDGE, not 3G. iPhone can't get 3G from Tmobile (cause it doesnt have it

)
All the apps will work the same, assumming you put in the right APN info when you do jailbreak and unlock the phone.
Location services are limited on the 1st/2nd gen iPhone because its lack of a GPS. The iphone 3G has GPS, so apps that require location based services will run better, and GPS is really useful, especially when you travel alot.
Anyways keep posting questions if they arent asnwered yet!