What is the best version of iOS to use on an iPhone 3G?

my girlfriend is currently using an iPhone 3G (iOS version 3.1.3 - 7E18) and I've noticed it can be very sluggish. She doesn't use it for much more than the usual messaging/safari/mail. Compared to my 3GS it is pretty terrible.

I used to have a 3G (still do in fact, and it runs much smoother/faster).

So my question is, what is the best version of iOS to run on an iPhone 3G?

I'm going to downgrade (if necessary, which I think might require jailbreak which I'm not thrilled about) or try a restore and see if that fixes it, but I'm not sure if it's even possible to restore her phone but keep it running 3.1.3.

Any advice would be greatly appreciated, thanks!

From my experience, 3.1.3 is indeed the best version for iPhone 3G, if you don't want any new or updated app. I've installed 4.2 on an iPhone 3G and it does become slower, though not so bad. If you put side to side a 3G with iOS 3 and one with any version of iOS 4, you'll see the 3 outperforming the 4 for most tasks (other than some native multi-tasking maybe). Other than the slightly faster performance, the best iOS for any iDevice is the latest one, like wjlafrance said.

Unless it is jailbroken, I can't tell what could possibly make iOS 3 slow. On iOS 4 it is only multitasking that can harm the performance AFAIK. Same issue with jailbreaking - gets slow if you install too much stuff running on the background. And an old device will suffer aging impact only on the battery. Hopefully a fresh restore would solve the "sluggish" but I'm afraid it might not.

Anyway you can easily* downgrade without jailbreaking. On 3G, you just* need the right file, enter DFU mode and option+click on Restore from iTunes.

* It is that simple, but there is more to it and it can become complicated. If you need more details, try this guide on lifehacker or this another even more detailed one on redmondpie.

iOS is always being optimized, and Apple's OS's are known for running faster than previous versions, even on older hardware. iOS 4.0 was bad on the 3G, but 4.1 is much better.

As a rule of thumb, you're always best running the latest version of iOS, unless you're a jailbreaker and/or unlocker, in which case you should run the latest exploitable version of iOS and the baseband.