Taimur Asad at Redmond Pie has managed to get iMovie to work “almost perfectly” on his 3GS, and posted a guide so you can try it out for yourself. It requires a jailbroken device, some modifications to files, and a little SSH witchery. This method claims to work on any model iPod Touch and iPhone running 3.1.2 or newer firmware, but this is unconfirmed. The video shows it working surprisingly smooth on the 3GS’ 256 megabytes of RAM. If you try this out and get it to work, let us know how it performs in the comments.
Update: The guide has been removed due to a DRM violation.