The iPhone 4 has a front facing camera along with the initial back camera, it has Retina Display (basically high definition graphics) it runs more smoothly than the 3GS, and it's more smooth. When it comes to storing videos and movies, either phone is okay for that, but if you have too many then you would run out of space pretty quickly. You should get the biggest capacity one there is (32 GB), but the thing is the iPhone 4 only comes in 8 GB now since the iPhone 4S came out, which the iPhone 4S can go up to 64 GB. If you're able to get a 4S for $399, you would be able to store a lot of movies and videos on it.
Hope this helps.