While rival phone companies and manufacturers search for an iPhone challenger, Apple hasn't been standing still. Last month, Apple released new and improved iPhone models and pricing.

The "S" in the iPhone 3GS moniker stands for speed - speedier main and graphics processors cutting boot time in half and letting applications start and run faster. Improved game performance is especially noticeable. Even Web access, though limited by 3G network connection speeds, feels faster.

The new iPhone also adds several features that users of the earlier models have wanted:

• An improved camera (jumping from 2.0 to 3.2 megapixels) with focusing improvements, video capabilities, basic on-phone video editing, and YouTube uploading.
• Easy-to-use copy and paste.
• Voice control - though I found it somewhat hit-and-miss.
• Somewhat better battery life.
• A grease-repellent screen coating.
• Subscribers to Apple's MobileMe service can now use it to locate a missing phone or wipe its data.

A model with 32 GB of storage sells for the price of the previous generation's 16 GB model ($299 with plan; $199 for the new 16 GB model).

Canadian customers get tethering - the ability to plug the iPhone into a computer and access the Rogers' data network to use the computer online and MMS messaging. Neither of these are available to US customers yet. (When comparing Rogers' Canadian iPhone offering to AT&T's US offering, note that AT&T signs customers to a 2-year plan with unlimited data access for US$30/month while Rogers ties customers to a 3-year plan with 1 GB of data per month for C$60 or 2 GB for C$75.)

Some of these new features - the speedier processor and the higher-resolution camera, for instance - are hardware-based; these are only available on the new models. Others - such as copy and paste - are software-based. The software features are included in a new version of the iPhone's firmware, a free upgrade for owners of earlier iPhone models. Rogers is continuing to offer the 8 GB version of the earlier iPhone GS with the price reduced to $99.

Also updated to the new firmware: Apple's iPod touch, which is in many ways an iPhone minus the phone, camera, and GPS features - also minus the monthly service charge. Owners of older touch models can get the new software features, but for them it's a $10 upgrade. Owners of both the iPod touch and the iPhone can pick from the 50,000 (and growing) applications and games available at Apple's App Store.

Still missing:

• Unlike Android phones, there's no multitasking. Yes, you can receive a phone call while playing music, but otherwise it's pretty much one application at a time.
• The web browser, while generally best of breed for smartphones, still lacks support for Flash animations and multimedia.
• Phone performance remains, at best, so-so.

While the HTC models offer removable (and hence expandable) storage and batteries, the iPhone continues to build these in - potentially a limitation. Some may prefer the physical keyboards on most BlackBerry models or the Android-powered HTC Dream to the iPhone's touchscreen keyboard. And though Apple, last time around, improved iPhone compatibility with Microsoft Exchange servers widely used by large organizations, BlackBerry and Windows Mobile phones play better with corporate networks.

Owners of last-generation iPhone 3G will find the new version appealing but not a must-have upgrade; owners of the first generation iPhone will find it more compelling. PC Magazine calls the new iPhone 3GS the "most flexible handheld computer."

Too bad it's not equally compelling as a phone.

First published in Business in Vancouver, July 28- August 3, 2009; issue 1031. Adapted for use on Low End Mac.