well the app radio is not really a stand alone unit, it doesnt have a CD/DVD drive and is basically a AM/FM radio with a large screen, it heavily relies on your Iphone's internal resources for most of its content and nav stuff
where as the 3500 doesnt need another device to be fully functional.
also from my experience, the AVH series is far less glitchy that the app radio series. not to say that the app radio is bad, because for its price, its a pretty good value, but it is not perfect and as long as your willing to deal with the little hiccups then it could be a great choice.
I have been considering an App Radio 2 for one of my cars, but as an android user, there is a lot of stuff i need to work out for it to work good for me (mostly looks like getting a $30 "jailbreak" app and getting the right MHL to HDMI adapter...) knowing ahead of time with what problem most of my customers have had, for the right price I could deal with the glitches (I mean, come on, I've dealt with the F900 for years now lol)
plus after playing with them a lot, I really love how the interface on the 3500 looks and feels.