Re: a more-compelling reason to upgrade might be the next iPhone's almost-certain LTE capability
What alternate universe are you living in that the iPhone lagged behind anything?
Aside from the fact that only a small percentage of people even had smartphones in 2007, check out which ones were considered the best at the time: Palm Centro, BlackBerry Curve, AT&T Tilt, Nokia N95...
With some exceptions, your standard high-end smartphone in 2007 had a 320x240 (non touch-)screen with 16 bit color, 64MB RAM, ~300MHz processor, and 1.3 megapixel camera. Compare this to the iPhone's 320x480 32-bit screen, 128MB RAM, 400MHz processor, 2 megapixel camera, and accelerometer. The only things it lacked vs. a couple competitors was 3G and GPS, which was "fixed" a year later.
For whatever reason Apple has a reputation as being the company for hipster douches so some people assume they aren't good technically but the iPhone was a technical tour de force at the time it was released.