What exactly is the difference between 2.5G, 3G and Wifi? I understand that genereally 3G is faster than 2 and 2.5 G and Wifi is faster than both of them, but what specifically makes 3G not feasible right now?
That's a great question, and one most people probably don't know. The main difference is between WiFi and "x"G.
WiFi is strictly a local (short-range) wireless protocol. Best case with the latest version (802.11n) is about 500 feet line-of-sight, and is one or two orders of magnitude faster. Trancievers (like the Apple AirPort) are available to end consumers.
"x"G (x = 2, 2.5, 3, etc.) are industrial wireless data protocols used by cell phone companies to send and receive data over their wireless networks. They work at different speeds (see the Wikipedia link above), are currently much slower than modern WiFi, but work over much longer distances (like from a cell phone tower to your data-enabled phone). Trancievers are only industrial, as their deployment and operation are regulated by the FCC.
3G is perfectly feasible right now, but as wot_fan said, is very limited in it's availability (select major metro only). Companies with 3G networks and manufacturers of 3G-compatible devices naturally crow about their being the "fastest" and they're right, but imo that's not really relevant for most people. A Bugatti Veyron may be the fastest production car, but you're not going to drive it to work. "Work" for most cell phone users is making calls, text or sometimes photo messaging, and a trickle of data when you might want to look up something on the text-based mobile internet. More is certainly coming (Steve Jobs talks about the "real" internet in your pocket) but Apple figured that right now it wasn't worth it to use a costlier, more power-hungry chipset. Speed freaks and numbers watchers (and the very few people who really could benefit from high-speed data in their fortunate home city) think 2.5G EDGE on an iPhone is crippling, but my opinion is that Apple made the right call.