Turns out both do well, with the Mino having higher resolution, of course, and the iPhone getting smoother video with less pixels to push around.
I've had similar results in comparing both cameras. The video from both is a bit shaky, and neither camera hosts an image stabilizer, but iMovie can fix that if you want to take the extra time.
I think the 3GS video is quite good, and for someone who wants to carry one device, it fills the bill. There's no question that the Mino will give you more detail, and it is wrapped up in a seductively small and easy to use package.
Follow this link to an explanation of how the test was run, and the video.