I’m about to buy an iPhone but since researching have discovered there’s the 3G, 3GS, and the smart phone ;( a little confused if anyone could help out please ???

A 3G phone (Third generation) is able to take advantage of faster download speeds than previous generation phones (2.5g/2g). 3G allows for phone download speeds of up to 14 Mb/s, much faster than the previous standard 2.5g.
3G will allow your phone to access content that a 2G phone would not be designed for. For example, it will allow you to quickly and seamlessly download music, surf the web, check email, etc. Whilst all this is possible in 2G, because of download speed limits it is not exactly viable.

i heard about this a while ago and tried to google it but haven’t found anything.. anyone know what im talking about or know that it exists?

Also, how does the phrase “Hotspot” come into play?

I have a battered old Sony-Ericsson and it needs replacing. I’m not too bothered about having the top of the range, latest phones (I only end up breaking them anyway.)
I’m just looking for something a bit smart with a decent camera on it for about 50 or 60 quid.
Any recommendations?