Yes, the 3GS does include basic editing tools, but very basic, and no effects at all (stitching, etc). Now that all changes with the release of ReelDirector for the iPhone.
Nexvio's iPhone app makes up for Apple's omissions by adding in the ability to add titles, basic video effects and, most importantly, clip stitching as well. Simple and easy to use as well, according to the company.
Now bear in mind: this is not a Final Cut
