You can take or leave the iPhone 3G. In the first reviews, Walt Mossberg found it to be "a more capable version of an already excellent device"; while USA Today's Edward C. Baig gushed that it's "a handheld marvel" that has "no equal among consumer-oriented smartphones."

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.