Space.

Once again, Apple has doubled the capacity of the two iPhone models: $199 and a two-year contract buy you a 16GB one, and $299 and a two-year contract get you 32GB. With the 16GB phone, what you’re getting is a price cut: more memory for less dough. With the 32GB model, however, you’re getting more power–this is the first iPhone (and one of the first phones, period) with a capacity that high.

Me, I’m as excited about the extra elbow room in the 32GB 3 GS as I am by any of its other new features–my 3G is perpetually maxed out, but with 32GB I should be able to tote most of my music, hours of video, and more apps than I’ll ever be able to use. Some will still gripe that the 3G S doesn’t have a MicroSD slot for removable memory cards. For at least 90 percent of us, though, 32GB should be enough elbow room to eliminate the need for a card slot.

A Compass.

I would have killed for this when I was a Webelo, and it’s still pretty nifty–and more impressive in person than in theory. The iPhone 3G S contains a compass that powers an application dedicated to telling you which way is which. More useful: The compass also lets you double-click on the positioning icon in the Maps application to orient you correctly. (In the year I’ve owned an iPhone 3G, there have been multiple times when I’ve had to wander around a bit and watch my green dot travel around on a map to determine which direction I was walking.)

The compass will presumably also prove useful in location-aware third-party apps. Call it a feature which isn’t going to prompt many people to upgrade in itself, but which a lot of folks will be pleased to have.

Smudge Resistance.

The iPhone 3G S’s screen sports something called an oleophobic coating. It’s designed to resist fingerprints, and works as advertised–while it doesn’t eliminate smudges altogether, it makes them less obvious and easier to wipe off. It also seems to give the screen a softer, more pleasant feel as you drag your fingers around. I’m not sure whether anyone else in consumer electronics is using this coating, but if it wound up on portable devices of all kinds, I wouldn’t complain. .

Voice Control.

This is another feature that lots of mundane phones have had for a long time, and which is already available courtesy of third-party iPhone apps. Hold down the home button, and you go into a special mode where you talk to your iPhone. It also talks to you, in a robotic-but-comprehensible voice reminiscent of the new iPod Shuffle.

The two things this lets you do are call contacts and play music. And for me, at least, the first option worked well, and the second one pretty much didn’t work at all.

When I said “Call Rusty Hammersmith”–a name I just made up, but you get the idea–the 3G S pulled up the correct name from my six hundred contacts, and even asked if I wanted to dial Rusty’s home, work, or mobile number. But while Voice Control can theoretically play artists or songs you ask for using the iPhone’s iPod feature, the few hundred songs I have on the phone seemed to baffle it. It did understand who I was asking for when I said “Play Antonio Carlos Jobim,” but when I asked for the Hollies it gave me Keith, the 98.6 guy. When I asked for Keith, I got Dusty Springfield. When I asked for Dusty, I got Tom Jones.

In all cases, switching to Voice Control mode lets you issue a single command, then the iPhone switches back to standard touch-based input until you hold down the Home button again. That’s not a major issue for phone calls, but it further reduces its appeal for music, where you might want to select a playlist, then jump back and forth by voice control alone. If you need to press buttons to get back into voice mode–and as far as I can tell, you do–you might as well just press buttons to move around your music collection.

I’m not traumatized by all this, since I don’t find voice control all that alluring a feature in the first place. But this was the only new iPhone 3G S feature that I’d have to call a disappointment. Be forewarned if you consider it a major argument in the phone’s favor.

Oh Yeah, One Hundred Other New Features.

The iPhone experience is as much about software as it is about hardware, and the 3G S is the first iPhone to ship with OS 3.0. It has extremely good search all over the place; it takes much better advantage of its screen in landscape mode; it has cut, copy, and paste; it’ll do MMS and will be able to be tethered to a laptop as a wireless modem, once AT&T gets around to unlocking these features. It’s also rife with stuff that will let third-party developers build better apps, including streaming video features, peer-to-peer networking over Bluetooth, the ability to offer subscription services, and “Push Notifications” that let apps send you messages even when they’re not running.

If Apple took a path that’s common in the wireless phone world, and shipped the iPhone 3G S with OS 3.0 but didn’t offer the new software to owners of earlier iPhones–or only offered it after months of delay–the iPhone 3G S would represent a giant leap over the 3G. But the happy fact is this: Owners of the iPhone 3G (and the original iPhone) can get iPhone 3.0 for free, and give their phones many of the 3 G S’s best features. Most of them will do exactly that.

So should anyone who already owns an iPhone consider the 3G S? Yup–if you still have an original iPhone, the 3G S’s faster hardware, high-speed wireless, GPS, and larger memory capacity add up to an appealing upgrade that’s easily worth the two-year contract price. For people who own an iPhone 3G, the new features in the 3G S that might merit an upgrade are the better performance (especially in Safari), the video capability, the longer battery life, and the 32GB option. (I didn’t find the better still camera, compass, smudge resistance, or voice control exciting enough to consider paying hundreds of dollars for, but the voice control is the only one of these features that I didn’t like.) Bottom line: It makes sense to delay any upgrade to the 3 GS until you qualify for the $199/$299 upgrade, and even then you might wait to see what Apple releases in the summer of 2010.

Of course, most of the people on the planet don’t own an iPhone at all. If you’ve wanted an Apple phone but have had the fortitude to wait, my advice is simple: Get this one. Palm’s new Pre is extremely impressive given that it’s an all-new platform, and there should be multiple phones based on Google’s promising Android OS by the end of the year. But the iPhone’s software retains a fair chunk of the five-year head start that Steve Jobs correctly said it had on the rest of the industry when he announced the original iPhone two and a half years ago. And with the 3G S, the iPhone finally gets hardware that’s completely worthy of that remarkable software.

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