We have a video of Steve answering this very question. Clearly I wasn’t the only one that was curious.

He doesn’t just give a simple answer why and then try and move on either, the video is actually worth a watch. The summary is that the battery life for a 3G iPhone just isn’t good enough right now.
As a bonus I put a video prior to the event at the bottom of this article, it gives you a good idea of the number of people there and of the size and appearance of the Apple Store in London. So watch and enjoy.









3g is coming in 2008 per http://www.dailytech.com/3G+iPhone+Coming+in+2008/article8933.htm
The question the article poses is “When in 2008?”