Upgrading from Original to 3GS. Please help.

I am wanting to upgrade my original generation iPhone to the newer 3Gs. I am planning on giving my wife the original generation iPhone to replace her Blackberry Curve. My question is:
Once I purchase the new 3Gs, will the new phone sync with iTunes and put all my current Apps like I have everything on this current phone? I assume once I register the phone with iTunes my phone number will be transferred to the new phone? As for my wife, how will she get her phone number to the original iPhone that I am giving her? Does she just register the original phone on iTunes as well or should she swap out her SIM card with the one in the original phone?
Please help, this is my first iPhone upgrade and I don't want to mess anything up and lose all my Apps that I have. Thanks!

See this: How to replace an original iPhone with an iPhone 3G or iPhone 3GS, http://support.apple.com/kb/HT2109
Here are AT&T's instructions for your wife: Give these instructions to the new iPhone user to activate or upgrade:
Customers new to AT&T or adding a new line to an AT&T account:
1. If an AT&T SIM card is not provided, visit an AT&T Store and inform them you need a SIM card for your iPhone (www.wireless.att.com/find-a-store/).
2. If an AT&T SIM card is provided, insert the SIM card into iPhone.
IMPORTANT: If your activation was processed in an AT&T store, you must choose the Existing
Customer option in iTunes.
3. Complete the activation process at home or work via iTunes at www.apple.com/itunes
Existing AT&T Customers
1. Use current AT&T SIM card.
2. Complete the activation process at home or work via iTunes at www.apple.com/itunes
The iTunes activation process will perform a credit check when activating a new line of service. iTunes will also allow you to transfer your number from a different wireless carrier, select a rate plan and required data plan, upgrade your text message package, set up your iTunes account, accept iPhone and AT&T Terms and Conditions, and download the latest version of software to your iPhone.
How to Insert/Remove the SIM Card
To insert the SIM card, insert the end of a small paper clip into the hole on the SIM tray (located at the top of your iPhone). Press firmly and push it straight in until the tray pops out. Insert the SIM card so that it is positioned within the tray’s form. The gold side will be visible if the SIM card is positioned correctly. Close the tray.

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