More than just altivec, G4's add the ability to use L3 cache and exist in SMP(can be as large as 4) configurations. G3's could be used in parallel, but they were not optimized for it and that use is quite rare(see http://maccentral.macworld.com/news/9902/25.linuxexpo.shtml for the only one I know) I believe that cache snooping has also been implemented, but not sure if the Apple SMP's use it or not.
Aaron
I also remember reading that the G4 can perform more calculations per cycle when compared with the G3 - due to additional integer units.
Nevertheless, for a single processor machine, the G3 is awesome - especially if IBM really does ramp up its clock speed. Especially for non-Altivected applications, it's a great chip!
I don't expect the price of iBook to drop, be the price of the original iMac ! We should now have a G3 iMac with 256 MB RAM and CD-RW for less than $600.