In addition to the considerably and welcome boost in memory, especially for those who would like to watch storage-hungry videos, the new iPhone and iPod touch ship with the major software update Apple made available in January (more on that below). Otherwise, both new devices appear to be the same as the current models.

The new models sell for $499 each, $100 more than the 8GB iPhone and 16GB iPod touch models, which go for a piece.

When Apple starting offering the iPhone last June, it also came in a 4GB variation. But since the lion's share of people buying iPhones bought the 8GB edition, Apple discontinued the smaller-capacity iPhone and lowered the price of the 8GB model by $200, to considerable controversy, to its current price point.

Don't expect Apple to make that mistake again. We expect the prices to stay fairly constant until the release of a 3G iPhone.

The new iPhone and iPod touch models should boost sales of those Apple lines, especially for those who want to make use of their exceptional displays to watch video. With the upcoming release of a software development kit (SDK), considerably more people will load software directly onto their Apple devices, making the boost in memory even more necessary for some.

As it is, Apple's already sold millions of iPhones, 4 million last year alone. The thing is, a little more than a million (that's 1 in 4) of them were bought to be unlocked and used with carriers other than Apple's official carrier partners, particularly Apple's first one, AT&T Wireless.

This greatly affected not just the operator's bottom-line, but Apple's as well, since it gets a percentage of the carriers' monthly service fees.

With New Software Comes New Functionality
Software update 1.1.3, the upgrade that ships with the new 16GB iPhone and 32GB iPod touch and is available for earlier models, adds Google's "My Location" service, an upgrade to Google Maps uses cell phone tower triangulation rather than GPS satellites to determine your location. While less accurate than GPS, this technology is capable of determining your general position and displaying it on a map.

Other improvements include the addition of support for song lyrics and Apple's new iTunes movie rental service, in addition to the ability to send SMS or text messages to more than one person simultaneously.

You can also now create as many as 9 custom home screens. A simply flick of the finger allows you to go through them. Home screen icons can now be rearranged as well.

The software update also adds a button in the Safari Web browser to allow users to save bookmarks, called Web Clips, directly to the iPhone's home screen(s). This is very convenient for those who've made good use of the thousands of so-called Web 2.0 iPhone applications.

In addition to the new features listed above, upgrade 1.1.3 brings the iPhone's Mail, Notes, Stocks and Weather applications to the iPod touch. As the iPod touch isn't a phone, Google’s "My Location" service relies only on Wi-Fi wireless to attempt to determine a user's location.

Unlike with iPhone users and those who buy the new higher-capacity iPhone and iPod touch models, Apple is, unfortunately, charging 16GB and 8GB iPod touch users $20 for the upgrade.