• Screen resolution - The 3GS has a 480x320 screen (153600 pixels). The N900 has an 800x480 screen (384000 pixels), so every N900 frame rendered is the equivalent of 2.5 Jesusphone frames.
• File format limitations - When it comes to video, the 3GS is limited to two: H.264 and Quicktime MPEG-4 files encoded to Apple's strict specifications (i.e. no higher than 1.5/2.5mbps, maximum res 640x480). By contrast, the N900 is limited to... anything readable by FFmpeg or gstreamer (i.e. just about every god damn video format ever made ever).

So while you give up a "guaranteed" smooth experience, it's really a compromise for more utility, such as being able to play AVIs straight from the interweb without the need for long and pointless transcoding. While I wouldn't call the video playback on the N900 perfect, the sheer range offered by osso-media-server/Mplayer is unparalleled and is (for me at least) a killer feature.