“Is the series 3 a better buy than the 2? Is the series 2 being phased out in favor of the 3?”
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I researched the two and could not find a significant benefit to the Series 3 unless you plan to purchase the 3 with the data plan. Both the 2 and 3 have GPS and are waterproof which was why I decided to upgrade from my Series 1 which did not have a GPS and was only splash resistant. As far as I know Apple will no longer make the Series 2 so yes it will be phased out but should not effect you if you decide to purchase one. They still support Series 1 and 2 with all the software upgrades.
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