It would be easy to dismiss the Apple iPhone 3GS as an inconsequential hardware upgrade. But to do so would underestimate how much, collectively, the phone’s new features augment the iPhone experience. With the iPhone 3GS, Apple solidifies its leadership position in a crowded smartphone landscape.

On the outside, the iPhone 3GS ($299 for 32GB, or $199 for 16GB, with a two-year AT&T contract, as of 6/22/09) looks and feels virtually identical to the existing iPhone 3G (now $99 for 8GB with a two-year AT&T contract). Yes, it’s disappointing that Apple made no refinements in the external case (see our review of the iPhone 3G for more detail, but it’s simply a minimalist design dominated by its display and the home button beneath that display). And yes, it’s curious that the colors remain the same, black or white gloss (this from the company which made sure its audio players came in every color of the spectrum).

But inside, the iPhone 3GS has been fully redesigned, with new core components (CPU, memory, integrated compass, video recorder) in different locations, no less. And together with the iPhone OS 3.0 upgrade (which makes many compelling features available to existing iPhone customers), the iPhone 3GS stands tall. After pounding on it, I can say that at the full-subsidy prices, the 3GS is a surprisingly worthy upgrade for heavy users of the phone’s Web and gaming capabilities, and for general-use apps–even if you’re only jumping from the iPhone 3G. Read on to learn why.

Performance

Apple has played down the upgraded component specs on the iPhone 3GS; instead, the company simply promised noticeably faster performance. And the 3GS, with its CPU boosted (to 600MHz, from the iPhone 3G’s 412MHz CPU) and its memory doubled (to 256MB), indeed delivers a noticeably zippier user experience compared with the original iPhone and the iPhone 3G.

Not only do apps open faster, they respond faster, too. These differences were evident in my use over both 3G and Wi-Fi. The annoying lags for accessing data or redrawing a screen are gone; moving around from one complicated Web page to the next feels downright breezy, not onerous.

I wasn’t surprised that games–I tried Oregon Trail and Peggle–were snappier, since the graphics has been bumped up, with Open GL ES 2.0 for mobile 3D graphics and, according to teardown reports, Imagination Technologies’ PowerVR SGX.

But I was pleasantly surprised to have a noticeably better experience navigating apps like Marco Polo CityGuide London, a largely text-based utility with hooks into the Maps app. And the London Tube Underground map didn’t need seconds to redraw as I rapidly scrolled within the map. These small differences add up in a big way (especially if you’re standing on a street corner while touring in London, trying to find your way), and made for a much more pleasing experience as I pounded on apps, switching among them at will, my fingers gliding fast to move from one feature to the next.

Call quality and reception remained the usual mixed bag we’ve come to expect from AT&T. Calls sounded adequate, but sometimes lacked the crisp clarity I’ve experienced with other handsets, including the T-Mobile G1 and the T-Mobile MyTouch 3G. How much of this is attributable to the AT&T network versus the handset itself is unclear, but moot anyway, given that the phone remains locked to AT&T, and its network is the one iPhone users must contend with.

Apple’s claims of longer battery life from the previous generation are true, though not by much. According to the PC World Test Center’s battery life tests, the iPhone 3GS had an average talk time 6 hours and 12 minutes–only 34 minutes longer than the iPhone 3G. Still, I couldn’t get through a full day of real-world usage without needing a charge (I engaged in talk and data activities, plus checking my location on a map, and shooting off some photos and videos, all with the Wi-Fi connectivity enabled). For data, the company rates the battery at up to 9 hours time over Wi-Fi, and 5 hours over 3G.

One pleasant battery-related addition is a new Battery Status indicator, which you enable In General/Usage. I’d often wondered aloud why earlier iterations of iPhone couldn’t do this seemingly basic task–tell me in numbers exactly what percent of the battery life was left. I’m still trying to gauge the accuracy of this battery meter, but I’m glad to finally have it there nonetheless. Now, at least, I don’t have to guess what the gauge icon represents; I know that after about 4 hours–with both Wi-Fi and 3G enabled, but no data transfers and 27 minutes of phone conversation–the battery was down from 100 percent to 78 percent.

Imaging

Beyond the performance boost, the iPhone 3GS features a notably improved imaging experience that ranks high among the hardware upgrades built into the iPhone 3GS handset. The camera jumps from 2 to 3 megapixels, a welcome if moderate increase that makes the phone’s camera somewhat more viable for on-the-go snaps. And the camera now includes a video mode–finally.

In my hands-on use, I found the iPhone 3GS camera surprised in some situations, and disappointed in others. The camera app opened and was ready to shoot with just a 3-second delay. I was pleased by the autofocus and tap-to-focus features; my images were reasonably sharp, and I found that by selecting different focus points, I could change the image’s exposure as well as composition.

In some shots, the focus select had minimal impact on what area of the image appeared sharp. But other shots seemed to benefit greatly, even though when the feature brightened the dark areas, it completely blew out the light areas. The macro mode works invisibly and without intervention. Still, I was annoyed that the autofocus box didn’t confirm sharpness for me by turning green, as happens on many point-and-shoot cameras; sharpness was often impossible to tell on the iPhone’s screen.

Though Apple boasts of improved low-light handling with the iPhone 3GS camera, I had mixed results with indoor andlow-light shots. A low-light dusk shot ended up being very grainy, with degenerating building details when viewed at full resolution. Some indoor shots looked decent, but others were barely passable and would have clearly benefitted from a flash, had Apple included one. Maybe we’ll see Apple catch up to its competition by adding a flash in its next version of the iPhone handset.

Also on the wish list: software-based image stabilization. I have often found that even images shot in daylight were not sharp at full resolution, especially images I tried to shoot one-handed. With its on-screen shutter button, the iPhone’s camera just doesn’t lend itself to one-handed photography. And while on the topic of what’s missing, the Camera Roll app still lacks integration with Web services; sure, Flickr has its own app, but that’s not the same as viewing a pic and deciding to post directly from the camera roll.

The bigger news is the inclusion of video capture and editing. The iPhone 3GS camera app has a slider switch to activate the video camera, which records 30 frames per second video at 640-by-480 resolution. In video mode, the camera shutter turns into a red record button you press once to start recording, and again to end recording.

Sending video is very easy: The phone has integrated hooks into YouTube, MobileMe (Apple’s $99-a-year service), and e-mail. Just select the service, and proceed from there; for YouTube, the iPhone 3GS will automatically compress the file in preparation for upload to your YouTube account. Want to trim your video before sending? No problem: The in-player iMovie-like frame editor makes snipping the beginning or end of a clip a breeze.

The videos I captured looked better than many typical camera phone images at the same resolution, and I found the inclusion of a video camera handy in a pinch when I was caught off-guard with a video opportunity and had no other camera on hand. But the iPhone 3GS can’t replace the video you can capture in 720p high-definition with many digital cameras and compact video recorders like the Flip Mino HD. And like-resolution dedicated camera and camcorder devices generally have a few advantages, such as greater stability for hand-held shots, and a tripod shoe if you want to steady the image.

The video feature has a few other rough spots. You can’t easily find the videos you capture: They’re lumped in with the rest of the images in your Camera Roll, with the video camera icon and length running along the bottom of the thumbnail. You also can’t access your videos from within the iPod music and video player. And, unfortunately, the much-ballyhooed editing feature is rather limited: Once you make an edit, it’s done. You can’t undo them, and you can’t save a copy of the original video–annoying if you want to keep the longer video for yourself and send an excerpt to a friend, for example.

One major gripe about both the images and videos: On a Windows XP-based netbook, Windows’ camera import tool brought all 257 pics and vids across to my netbook, but the order of the pics was completely jumbled compared with the order things were captured in my Camera Roll. I’m not sure where the communication failure is between the two devices, but it was very frustrating.

Voice Control

Voice dialing is fairly common, and has been for years. This is a seemingly basic feature on which the iPhone 3GS is playing catch-up. But, at least it goes further by providing a range of voice controls for both dialing and music playback. When it works, I found it a wonderfully handy feature when driving, or even when walking down a street.

Hold the Home button for a count of three (a count of two invariably took me one page to the left), and the Voice Control screen pops up. Your command options scroll across in a rush, prompting your memory of the available commands (some imprecise mutations of the “accepted” options appeared to work): Play album, previous track, play songs by, dial, call, play, what song is playing, yes, no, cancel, shuffle, play more songs like this.

I found this feature worked with varying degrees of success. If I said to dial Rita and didn’t specify the number, it asked me which number I wanted. If I said Rita Home, it dialed Rita Home–even when I asked in a noisy restaurant or in a room with the TV on in the background. But Voice Control stumbled on other names, either offering the wrong name or not recognizing anything. And it missed some voice commands when a TV blared nearby. Also odd: If I said Perenson and there were three Perensons in my Contacts, it just accessed the first one in the Contacts list, and didn’t ask me which of the Perensons I wanted (even though I’ve seen reports that say it should). I asked it to play songs by REM and it played ABBA, and sometimes I didn’t say a thing and I suddenly noticed it dialing a number I hadn’t asked for. Oops.

One detail worth noting: Apple makes the iPhone 3GS more accessible to vision-impaired users through its new Voice Over feature. Once enabled, the phone can talk at you as you navigate among the touchscreen icons.

Display

The iPhone 3GS has the same 3.5-inch capacitive touchscreen display as its predecessor. The display still looks beautiful, displaying images at 320-by-480-pixel resolution. But these images are a bit “warmer”–they don’t have quite the vividness that they do on the iPhone 3G.

As shown by a side-by-side comparison in an earlier article, the iPhone 3G’s colors pop more; it has deeper browns at the top of the notepad, and deeper grays in the keyboard. The same screen on an iPhone 3GS has a dullish gray on the keys. In both instances, the auto-brightness setting was off, and the brightness level was identical.

In some images, we detected a slightly greenish cast on the iPhone 3GS. We found the color distinction quite noticeable on screens with white backgrounds, such as the search tab, the calendar, and the photo library. While some of these differences may not have stood out when we looked at the iPhone 3GS on its own, they did when we put the new handset next to the 3G.

When asked, an Apple spokesman said the color temperature and brightness level of the display has not changed from the 3G phone. Apple also says the new oleophobic (oil-resistant) coating had no impact on the screen, as the coating is transparent.

While some aspects of the 3GS’s display look dull and washed out in comparison with the 3G and even the original iPhone, I noticed a clearly visible improvement in blacks. An example was when I compared the original iPhone and the 3GS, both in the camera app, with their lenses facing a black table. The black of the table appears more dark gray than black on the original iPhone, so it’s clearly washed out and too bright; the table appears to be a more pure black with the iPhone 3GS. However, in this example, the noise level of the 3GS is also abundantly clear: Parts of the image show dramatic and intrusive evidence of reddish artifacts and noise.

The aforementioned smudge-proof coating, at least, is the real deal–it attracted fewer fingerprints than an iPhone 3G did when both cameras were used similarly, and those fingerprints wiped off more easily. Another benefit: The new screen’s texture has an ultrasmooth glide to it. In contrast, my fingers would more easily catch on the iPhone 3G (typically as they passed over a fingerprint or three).

Also, text appears slightly sharper on the 3GS compared with the 3G. That’s surprising considering that the iPhone 3GS has the same resolution as the iPhone 3G does. Apple says that fonts on the iPhone 3GS are rendered by the phone, as opposed to being bitmaps, and that this approach accounts for the smoother and sharper appearance of text.

Everything Else–Including OS 3.0

A couple of stray features have been crammed into the iPhone 3GS, and while they may seem minor, they’re sure to find their fans.

The newly integrated compass is handy for location-based and mapping applications (and if you’re communing with Mother Nature). The compass has distinctive, easy-to-read graphics, and it allows applications to orient to your current position. For example, the Maps app will reorient based on your directional heading.

Nike+ support is built-in now, too. Take iPhone 3GS on a workout with you, and it can track your progress together with the $19 Nike+ accessory.

Certainly, the OS 3.0 software update, which makes many cool features available to all iPhone users, could persuade some people to decide they don’t need a new handset. Among OS 3.0’s features: a landscape keyboard for all core apps; an innovative and useful implementation of cut, copy, and paste, the long-elusive iPhone feature; A2DP stereo Bluetooth; push notifications, an improved call log that shows details like the time and length of a call; spotlight search for searching apps, e-mail (subjects and to/from lines), music, and more; shake to shuffle; voice memos; and support for MMS and tethering, common features bizarrely not available to AT&T until later this summer.

Although the iPhone 3GS offers some compelling improvements for heavy users, I’m disappointed that Apple didn’t build more innovations into the handset, to differentiate itself from the pack. Some areas are still lacking, and there’s still no true multitasking (you can’t log into instant messaging while surfing the Web, for example).

But the performance enhancements do distinguish this otherwise evolutionary step-up phone from its previous iterations. The new features of the 3GS are few but choice. With 32GB of storage and its data and multimedia strengths, Apple’s iPhone 3GS is, despite the reservations noted, one of the best smartphones you can buy for the money.