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Well, we know that the iOS 4 upgrade is going to bring multitasking to the table. That's usually quite a memory hog since you need to keep multiple applications in memory now instead of just the OS and the single application running.
That increases your requirements exponentially based on the amount of multitasking you are going to be doing... so how much is really needed? How about double what the iPhone 3GS has. The iPhone 4 is rumored to have 512MB of RAM to keep things snappy.
MacRumors broke the news and you can read the full article here: iPhone 4 Confirmed to Have 512MB of RAM (Twice the iPad and 3GS) - Mac Rumors