Bluetooth is a proprietary open wireless technology standard for exchanging data over short distances (using short-wavelength radio transmissions in the ISM band from 2400–2480 MHz) from fixed and mobile devices, creating personal area networks (PANs) with high levels of security. Created by telecoms vendor Ericsson in 1994, it was originally conceived as a wireless alternative to RS-232 data cables. It can connect several devices, overcoming problems of synchronization.
Bluetooth 3.x was one of the most popular Bluetooth version used by devices and it Introduced support for an alternate lower layer, i.e. all the applications that were available with Bluetooth radio earlier can be run over an alternate radio, say like the 802.11 one. This feature is called High Speed (HS), and as the name suggests that was the intent and purpose. The HS feature is optional too.
What is new in Bluetooth 4.0?
Bluetooth 4.x introduces the support for collecting data from devices which generate data at a very low rate. The main intent of this feature, called Low Energy (LE), is to aggregate data from various sensors, like heart rate monitors, thermometers etc. The commercial name of this feature is Bluetooth Smart.
Cost-reduced single-mode chips, which enable highly integrated and compact devices, feature a lightweight Link Layer providing ultra-low power idle mode operation, simple device discovery, and reliable point-to-multipoint data transfer with advanced power-save and secure encrypted connections at the lowest possible cost.
General improvements in version 4.0 include the changes necessary to facilitate BLE modes, as well the Generic Attribute Profile (GATT) and Security Manager (SM) services with AESEncryption.
In addition to these main features each revision has improved upon power consumption, data rate, security, pairing reliability, ease and speed etc. That means if given an option, always choose the device with the highest Bluetooth version.