But let's not get too carried away. David Pogue at the NY Times points what many people are coming to realise. Namely that the iPhone 3G isn't "so much better that it turns all those original iPhones into has-beens". The really big deal here, says Pogue, is "the iPhone 2.0 software and the App Store, neither of which requires buying a new iPhone."
Crucially, the new 2.0 software is available for both the iPhone 3G and the original iPhone. While the addition of 3G and GPS (and a £99 price tag) will entice more people to buy an iPhone this time around, the new firmware refreshes the original 2G model, saving it from early obsolescence.
Old or new, Apple's slab-style handset is now an even bigger force to reckoned with.
Welcome to the App Store
While Apple has made a song and dance about the iPhone's new corporate talents, you just can't get excited about MS Exchange. The new App Store is the most exciting addition to the 2.0 firmware.
On the iPhone, the App Store is essentially an 'iTunes for software', a front-end for distributing tools, utilities, games and all manner of native applications. At launch, there are over 500 applications online, a quarter of which are free to download. On the one hand, classic games like Super Monkey Ball and Bejewelled 2 add an extra dimension to the iPhone. On the other, applications such as 'AIM', 'VoiceNotes' and 'Todo' fill obvious productivity gaps in the iPhone's current OS.
iTunes 7.7 makes the App Store accessible on your PC or Mac, while the 2.0 software adds the ice-blue App Store icon to your iPhone. You can either download sub-10MB files via EDGE or 3G directly. Bigger applications require a Wi-Fi connection.
A greyed-out icon for the new application appears on the iPhone's home screen with a status bar to indicate the progress of the download. Once finished, the icon becomes accessible and you double tap it to launch the application. Applications can also be installed via syncing your iPhone to a PC/Mac - there's now an 'Applications' tab in iTunes.
Like buying a song from the iTunes music store, you can browse through the various App Store categories (Entertainment, Education, Games, Healthy & Fitness, etc.) and pick what you want. A splash page gives you a brief description of what you're getting, complete with screenshot(s).
In addition to the cluster of free apps (we counted 115 at launch), prices on the App Store are as low as 59p for eBooks (such as Bleak House by Charles Dickens), and as much as £24 (for Netter's Anatomy Flash Cards).
The hottest (and oddest) iPhone apps
There's a lot of ho-hum content to sift through, but expect user ratings and Apple's popularity metrics to ultimately sort the wheat from the chaff. There are some obvious 'first-wave' software highlights - AIM for iPhone (free), an improved Facebook app (free), Super Monkey Ball (£5.99), Bomberman Touch (£4.99), Bejeweled 2 (£5.99) and Twitterrific (free). The Google Mobile app (free) is only available on the US App Store for now.
Super Monkey Ball is going to be the first purchase for many iPhone owners - the combination of bold, rich 3D graphics and tiltable Marble Madness gameplay is irresistible. 3D racers Cro-Mag Rally (£5.99) and Moto Racer (£5.99) also take full advantage of the iPhone's graphical grunt and accelerometer-based control system.
At the other end of the scale there are a cluster of far simpler games, such as Fingertip Sports Air Hockey (£1.79), Blackjack (£1.19) and the Simon Says-style game, Repeat (£1.19). Slower still, you'll find crossword puzzler Imangi (£2.39), while Surf Shack Software's Sudoku (59p) speaks for itself.
Elsewhere, the Sketches app (£4.99) also looks interesting, enabling you to scribble down notes and annotate/deface your photos. A natural extension of this finger-graffiti is Etch-A-Sketch (£2.99), an eerily faithful recreation of the classic 1950's toy. Drummer (£2.99) turns your phone into a virtual drumkit, while Rotary Dialer (free) supplements the iPhone's virtual keypad with an old rotary dialer.
The less we say about PhoneSaber (it makes your iPhone sound like a Star Wars lightsaber), the better. At least it's free.
Tidying up the iPhone OS
Apple is hoping that the 2.0 software on the iPhone will help it break into a corporate market dominated by RIM's Blackberry and Microsoft's Windows Mobile. Support for MS Exchange enables the sort of push calendaring, push email, push contacts and remote wipe capabilities that businesses have been crying out for. Ditto the built-in Cisco IPSec VPN client and WPA2 Enterprise support.
For the rest of us, there are only a few improvements to the 1.1.4 firmware, mostly designed to minimise excessive taps and swipes. The Contacts application has been gifted a nifty search function, so you no longer have to slide through the lengthy list of entries to find the contact you want. It works beautifully.
The Mail application, meanwhile, gets a handy bulk move/delete option. Again, this is hardly worthy of a "Woo! Yeah!", but it sensibly streamlines email management by letting you highlight several messages at once. You can then delete the messages or move them to another mail folder. Easy.
The Mail application can also now display Microsoft PowerPoint and iWork attachments, complementing the iPhone's original Microsoft Word and Excel compatibility. And should you receive picture/photo attachments in an email, the 2.0 software now enables you to save them to your Camera Roll.
Delve into the Settings menu and you'll see it's now got a 'Fetch New Data' option. This manages the 'push' functionality on the iPhone, which can be set to 15, 30 and 60 minute increments (or you can get your data manually).
If you have a MobileMe account, this option will regularly push and sync new mail, contacts, calendar entries and bookmarks to the iPhone. The menu warns that frequent 'pushing' will dent the battery life, however.
Most of the default applications - Stocks, Clock, Notes, Weather - are unchanged. Other changes are a result of Apple's new software or hardware. Tap on a photo in the Camera Roll, for example, and you now get the option to 'Send to MobileMe'. Start the Camera and you get the message: "Camera would like to use your current location". With the GPS in the iPhone 3G, you can now geo-tag your photos.
It's all about version 2.0 Finally, for all you Calculator fans out there, the resident number-crunching application has been given a scientific makeover. Turn the iPhone sideways and the Calculator flips into scientific mode.
There's no denying that the biggest impact of the 2.0 software is the App Store.
In amongst the Expense trackers and calorie counters, NYC subway maps and task lists, there are some interesting applications. It's still early days, so while we might lament the lack of a Trillian, an iPhone-friendly Wordpress UI or a video recorder, the current App Store should act as inspiration for other developers.
As an iPhone owner, though, it's disappointing that Apple put all its eggs into the corporate and App Store baskets. There are some glaring omissions from the 2.0 firmware - the ability to cut-and-paste text, for example, the ability to forward an SMS, forward contact info by SMS or email and MMS support.
I'm already looking forward to firmware 2.0.1.