Your next iPhone: iPhone 3.0 update or iPhone 3G S?

AT&T's decision not to support tethering, a business-friendly iPhone 3.0 feature that will be available where carriers permit it, strikes a decidedly sour note. Much will be made of this, but keep in mind that tethering is also not supported in T-Mobile G1 or Palm Pre (among many other models), and BlackBerry and Windows Mobile devices that support tethering require a service plan upgrade. Carriers, not just AT&T, prefer to sell computer cellular data connectivity separately. I'll wager that if you're buying a container load of iPhones from AT&T for distribution to employees, on the condition that they support tethering, the carrier will work with you.

Now, in all of this I've not mentioned the iPhone 3G S at all, and that's partly to make a point: Most of what people consider new in the iPhone doesn't require buying the new iPhone. If you already have an iPhone, you can think of iPhone 3.0 as Apple's gift to you of a new phone in the shape of a software upgrade.

S is for superior

If you don't yet own an iPhone, that's another matter. Even though I have not yet reviewed the iPhone 3G S, I will offer this advice: Skip the sale-priced iPhone 3G and get the iPhone 3G S. The price, $199 for 16GB of flash and $299 for 32GB, is more than right. The faster processor in the iPhone 3G S should make a big difference in 3-D and Web applications. I hope too that the overall user experience of closing and launching apps, a frequently invoked sequence that compensates for the iPhone's lack of multitasking, will improve markedly. The scope of custom applications that the iPhone 3G S can handle should expand as well. Some App Store software and in-house apps that are now implemented as native software for performance reasons might run in the simpler environment of the near-perfect Safari browser.

My expectations for the iPhone 3G S are bolstered by the performance-hungry features that Apple's engineers were able to squeeze into the new phone. The iPhone 3G S has a higher-resolution, autofocus camera that also shoots VGA-resolution video at 30 frames per second. I have a lot of high-end phones, but none that's fast enough to record video like that, much less edit it in the phone as the iPhone 3G S will do.

You can download voice dialers from App Store, but the iPhone 3G S's Voice Control looks a lot like Speakable Items on the Mac with its ability to drive other applications and answer questions. (Responses presumably appear on screen; if text-to-speech were a feature, surely it would have been demonstrated.) Speaker-independent voice recognition with a flexible vocabulary requires speed. Hardware-based data encryption, also a performance-sensitive feature, was mentioned in the WWDC keynote but does not appear in Apple's online marketing.

The iPhone 3G S also has a hardware compass to tilt your maps the right way before you start driving, but I don't think that will push a lot of iPhone 3G owners to pay a premium for a mid-contract device upgrade. I think that the most compelling reasons to upgrade from the iPhone 3G to iPhone 3G S will be speed and the 32GB capacity of the $299 model. If the App Store really does hit 100,000 apps by the end of the year, as I expect, 8GB will be tight quarters for many iPhone users.