The most obvious update to the application is the addition of a storyboard feature (Adobe calls it a "Sceneline") to supplement the application's standard timeline. Both can serve as the application's main working platform for arranging video and audio clips and transitions, applying effects, adjusting sound levels, and implementing other features, but storyboards are more common in video editing applications aimed at novices.
Storyboards are easier to work with because they use fixed time slots--you drag your clips to boxes in the storyboard, and then drag transitions into boxes in between the clips (or, unique to Elements 3, you can right-click on the boxes and choose transitions from a list). Adobe's Sceneline even labels clip boxes with 'Drag a clip here to add to movie.' The Sceneline isn't much different than, say, Pinnacle Studio's storyboard (except that the boxes are bigger), but it's still a nice addition to the application; as with Pinnacle Studio, even experienced users may find it handy to use a storyboard to quickly assemble a rough layout, and then switch over to the timeline for finer control.
Most of the other improvements are relatively minor, but still welcome. You can now import and edit high-definition video (HD camcorders are still expensive and rare, but I appreciate the future-proofing). A new stop-motion capture mode lets you capture still images from your camcorder at regular, adjustable intervals (think Claymation). Just plug in your camcorder and set two parameters, and the application will automatically insert the still images into the Sceneline or timeline. I found that the feature works best on video footage that doesn't change much; otherwise the shifts in movement from frame to frame are too jarring; it would probably help to plan your video shoot ahead of time if you're going to use the feature.