Although the iPhone 3gs natively takes spectacular video, you cannot simply take a frame grab but there is an easy solution that involves no jailbreaking or hacking.

Step 1:
select the video you want a frame from in your camera roll and turn your phone on its side to enter landscape mode (so it's wider than tall) the video automatically fills the entire iPhone screen.

Step 2:
use the scrub bat up top to skip to the frame you want to capture. Pause the video on this point

Step 3:
tap on the screen anywhere to make the video controls dissapear and all you can see just the video.

Step 4:
hold the sleep/wake button on top of the phone and then press the home button on the front of the iPhone and a screenshot is taken and saved to the camera roll.

You now had a still image of the frame on the movie you want!

I isn't the same an iPhone photo though the resolution is less and it's in PNG format but unless you get the photo on a computer and use a professional video editing program it's the closest you can get.

Also the iPhone video is only 640x480 resolution so it won't create anymore than a VGA resolution still from a video.