I also have an iPhone 4 16GB and did a backup and restore last night and it freed up 3GB and now runs a bit more smoothly. Suggest you try that before deciding if you need the upgrade. Might be better to have the home button replaced than replacing the phone.
Exactly. I also have the iPhone 4 and it was so slow that when typing the text would appear several seconds after hitting the keys. Terrible.
I simply uninstalled all unnecessary apps and it was back to normal. The best method would be a true full reset and installing only essential apps.
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