Apple's second generation iPhone -- officially unveiled this week by Apple CEO Steve Jobs and dubbed the iPhone 3G -- is slated to hit the shelves of Apple and AT&T stores across the US (and in 21 other nations) on July 11. The iPhone 3G will sport both cosmetic and serious under-the-hood upgrades from the current model and will feature a new, lower purchase price. It will also ship with the iPhone 2.0 firmware, offering access to a host of new operating system features, most notably the ability to install third-party applications using the App Store.

The iPhone 2.0 software will be available as a free upgrade for all previous iPhone models (and as a US$9.99 paid update for the iPod Touch).

For current iPhone owners, Monday's announcements raise a conundrum: Should you buy the new iPhone 3G or just update your first-generation iPhone with the new software? For the gadget-obsessed or serious road warriors, the choice seems clear: get to the front of the line at your nearest Apple Store on July 11. For more casual users, however, shelling out US$199 to replace an iPhone that's less than a year old may not be as easy a decision -- especially since it also means re-upping with AT&T for an additional two years and paying more in monthly charges.

New software vs. the new hardware

Overall, the biggest advances in functionality for the iPhone -- both in the year since its release and those coming next month -- are software based. The iTunes WiFi Music Store, the revamped Google Maps app that allows an iPhone to determine its location based on cell tower and WiFi hotspot locations, and the ability to send text messages to multiple contacts were all made possible by software and firmware updates; no 3G or true GPS required. Given the breadth of applications possible for the iPhone, it's not surprising that the bulk of Monday's keynote focused on the benefits of the upcoming iPhone 2.0 update more than the hardware.

That means that if you're looking for a bunch of very cool downloadable applications, support for Exchange and other enterprise features, or access to Apple's .Mac replacement, MobileMe, you don't need a new iPhone. With its new features and functions, iPhone 2.0 will make every iPhone seem like new. So whether you just bought a first-generation iPhone last month before supplies dried up or you bought one when they were released last summer, you can still get all the spiffy goodness at no cost.

For those who don't want to live on the bleeding edge of technology or just don't want to pony money to replace a perfectly good device, the choice to simply update an existing iPhone is compelling. In fact, there are really only three major features -- 3G data speeds, GPS and better battery life -- that you'll get by purchasing a new iPhone. You'll also be able to use any standard headphones with the new iPhone without an adapter, thanks to Apple's move away from the original iPhone's recessed headphone jack. Sure, it's a nice bonus, but I don't know that I'd consider it a major feature worth making part of my upgrade decision.

The need for speed

The biggest change between the iPhone of '07 and the one due out in a month is right in the new model's name - 3G - and it is not a difference to be taken lightly. One of the biggest criticisms of the iPhone since its announcement in January 2007 was that is relied on the slower but more prevalent EDGE network. AT&T's EDGE is significantly slower than 3G wireless data services. By adding WiFi to the iPhone, Apple was able to mitigate the impact of the slower data speeds, but only somewhat. In fact, one of the things I noticed after a few weeks of switching from a 3G Windows Mobile phone to an iPhone was how it affected my e-mail checking while on the go.