3G Stands for 3rd-generation. Analog cellular phones were the first generation. Digital marked the second generation.
3G is loosely defined, but generally includes high data speeds, always-on data access, and greater voice capacity.
The high data speeds are possibly the most prominent feature, and certainly the most hyped. They enable such advanced features as live, streaming video.
There are several different 3G technology standards. The most prevalent is UMTS, which is based on WCDMA. (WCDMA and UMTS are often used interchangeably.) UMTS is the 3G technology of choice for most GSM carriers.
The other major standard is cdma2000, which is an evolution of CDMA 2G technology. There are several types of cdma2000, each offering different data rates and levels of compatibility with 2G CDMA.