I have no experience of both cameras but I have the predecessor for 350D, the 300D. S3 IS is more of a general consumer camera which is aimed for the 'point and shoot' type of persons. Anyone with a hint of interest in photography should get the 350D or 400D instead (of course those not being the only options).
The S3 most likely will enable shooting photos using the lcd screen for aiming, the 350D will not due to different optics.
The basic setup of 350D will most likely produce slightly better pictures, but it's a better choice mainly for future upgradeability. No matter what he says about upgrading optics if the fly bites it bites and then he'll be happy to have the option.