Well, Sharp may have been talking about host,
Actually, the very next entry in the FAQ says that there "is no USB host function" on the 3100, so they weren't referring to that. Of course, we all know that it does in fact have USB host, so you can't take what they say for gospel. (They even say that the 3100 can't be used to access the Internet outside of Japan!) Basically, they like to be very conservative about the claims they make, so they don't have to officially support things like USB host.
But in this case, I don't think there is any functional difference between USB 2.0 with USB 1.1 speeds and being "only compatible with USB 1.1". Maybe the Zaurus can't support higher speed transfers, but they used a USB 2 chip for some other reason (like it being cheaper, smaller, or using less power).