iOS 5 is compatible with the following devices:
iPhone 3GS
iPhone 4
iPod touch 3rd generation
iPod touch 4th generation
iPad
iPad 2

Credit to apple for the info
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iOS 5 includes more than 200 new features for your iPad, iPhone, or iPod touch.

Notification Center:
You get all kinds of notifications on your iOS device: new email, texts, friend requests, and more. With Notification Center, you can keep track of them all in one convenient location. Just swipe down from the top of any screen to enter Notification Center. Choose which notifications you want to see. Even see a stock ticker and the current weather. New notifications appear briefly at the top of your screen, without interrupting what youre doing. And the Lock screen displays notifications so you can act on them with just a swipe. Notification Center is the best way to stay on top of your lifes breaking news.

No more interruptions
Notifications dont interrupt you and disappear quickly.

One-swipe access
Swipe down to reveal Notification Center.

iMessage:
Sort of like BBM but for iPhone. Send unlimited text, picture and video messages via any ios 5 device. Includes delivery receipts.

Send more than text
Send photos, videos, contacts, or locations.

See when theyre typing
Ellipsis points appear when someones responding.

Start here, finish there
Begin a convers

Newsstand:
A custom newsstand for all your subscriptions.
Read all about it. All in one place. iOS 5 organizes your magazine and newspaper app subscriptions in Newsstand: a folder that lets you access your favorite publications quickly and easily. Theres also a new place on the App Store just for newspaper and magazine subscriptions. And you can get to it straight from Newsstand. New purchases go directly to your Newsstand folder. Then, as new issues become available, Newsstand automatically updates them in the background complete with the latest covers. Its kind of like having the paper delivered to your front door. Only better.

All the news
Newsstand keeps your subscriptions in one place.

Read the latest
Alerts tell you when new issues arrive.

Shop for more
Tap to shop the App Store for new subscriptions.

Reminders:
A better way to do to-dos.
Next time you think to yourself, Dont forget to..., just pull out your iPhone, iPad, or iPod touch and jot it down. Reminders lets you organize your life in to-do lists complete with due dates and locations. Say you need to remember to pick up milk during your next grocery trip. Since Reminders can be location based, youll get an alert as soon as you pull into the supermarket parking lot. Reminders also works with iCal, Outlook, and iCloud, so changes you make update automatically on all your devices and calendars.

See whats next
View reminders by date.

Make a list
Reminders appear in a clean, ordered list.

Twitter:
Integrated right into iOS 5.
iOS 5 makes it even easier to tweet from your iPhone, iPad, or iPod touch. Sign in once in Settings, and suddenly you can tweet directly from Safari, Photos, Camera, YouTube, or Maps. Want to mention or @reply to a friend? Contacts applies your friends Twitter usernames and profile pictures. So you can start typing a name and iOS 5 does the rest. You can even add a location to any tweet, no matter which app youre tweeting from.

Camera:
Capture the moment at a moments notice.
Since your iPhone is always with you, its often the best way to capture those unexpected moments. Thats why youll love the new camera features in iOS 5. You can open the Camera app right from the Lock screen. Use grid lines, pinch-to-zoom gestures, and single-tap focus and exposure locks to compose a picture on the fly. Then press the volume-up button to snap your photo in the nick of time. If you have Photo Stream enabled in iCloud, your photos automatically download to all your other devices.

Access from Lock screen
Open the Camera app with one tap.

Shutter button
Press the volume-up button to take a picture.

Photos:
Enhanced photo enhancements.
Turn your snapshots into frame-worthy photos in just a few taps. Crop, rotate, enhance, and remove red-eye without leaving the Photos app. Even organize your photos in albums right on your device. With iCloud, you can push new photos to all your iOS devices. So if youre taking photos on your iPhone, iCloud automatically sends copies to your iPad, where you can quickly touch them up before showing them off.

Edit on screen
Tap to enhance your photo or remove red-eye.

Safari:
Even better site-seeing.
iOS 5 brings even more web-browsing features to iPhone, iPad, and iPod touch. Safari Reader displays web articles sans ads or clutter so you can read without distractions. Reading List lets you save interesting articles to peruse later, while iCloud keeps your list updated across all your devices. On iPad, tabbed browsing helps you keep track of multiple web pages and switch between them with ease. And iOS 5 improves Safari performance on all your iOS devices.

Reading List
Tap to save a page to read later.

Tabbed browsing
Move between sites using tabs on iPad.

Reader
Tap to read articles without clutter.

PC Free:
Independence for all iOS devices.
With iOS 5, you no longer need a computer to own an iPad, iPhone, or iPod touch. Activate and set up your device wirelessly, right out of the box. Download free iOS software updates directly on your device. Do more with your apps like editing your photos or adding new email folders on your device, without the need for a Mac or PC. And back up and restore your device automatically using iCloud.

Mail:
Your inbox is about to receive some great new features. Format text using bold, italic, or underlined fonts. Create indents in the text of your message. Drag to rearrange names in address fields. Flag important messages. Even add and delete mailbox folders on the fly. If youre looking for a specific email, you can now search in the body of messages. And with iCloud, you get a free email account that stays up to date on all your devices.

Calendar:
Get more perspective on your schedule with year view on iPad and week view on iPhone and iPod touch. Tap to create an event and drag to adjust the time and duration. Add, rename, and delete calendars directly from your device. And view event attachments without leaving the Calendar app. iCloud lets you share calendars with friends and family, and it keeps your events in sync on all your devices.

Game Center:
iOS is the worlds most popular gaming platform. With iOS 5, you can get your game face on with even more Game Center features. Post a profile picture. Meet your match with new friend recommendations based on the games you play and the players you already know. Discover new games without leaving Game Center. And size up an opponent on the spot with new overall achievement scores.

Wi-Fi Sync:
Wirelessly sync your iOS device to your Mac or PC over a shared Wi-Fi connection. Every time you connect your iOS device to a power source (say, overnight for charging), it automatically syncs and backs up any new content to iTunes. So you always have your movies, TV shows, home videos, and photo albums everywhere you want them.