Confession: It's been easy to warn folks away from buying an iPhone this year. A newer, better phone was clearly on the way. And last month Apple proved the predictions true by introducing a cheaper model loaded with GPS and a zippier wireless connection that will go on sale Friday, July 11.

The coolest thing about the next generation iPhone, however, is its new software. And if you already have the device, you're going to be getting the best parts of the new model for free very soon (or for a small charge to those who own an iPod Touch). Getting stuck with the old iPhone isn't looking as bad as we feared.

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Apple introduced the most interesting features of the new phone in March. CEO Steve Jobs unveiled the software of the new iPhone's and opened that software up to outside developers.

Perhaps the most interesting, and least heralded, thing about this new software is how much better it will mesh with the rest of your life. The software is chock full of small details that help you do this, like allowing you to get e-mail and calendar information directly from Microsoft Exchange servers.

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If you've got a BlackBerry, this won't make you switch. But if you're using an iPhone now, it means you might actually be able to get your work e-mail through your phone.

So what will make BlackBerry users sit up and take notice? The multitude of applications being readied for the phone by outside developers. The size and scope of Apple's developer program remains a bit of a mystery, but Apple has already shown off demos from online auctioneer eBay, mobile social-networking start-up Loopt, blogging service TypePad, the Associated Press and game developer Pangea Software.

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The best part of the developer program is that it promises to keep cranking out new applications for the old iPhone for years to come. Before, developers were limited to working with the Web browser built into the phone. Now Apple will distribute software from third parties to users through its new Apps Store, which will allow users to wirelessly download software on the iPhone or on their computer via iTunes. Apple will take a 30 per cent cut of any sales, but developers will be able to sell their software for whatever they see fit.

Venture capital firm Kleiner Perkins Caufield & Byers said it will launch a $100 million fund, dubbed the iFund, to invest in developers creating applications for the iPhone.

There will still be some things the new iPhone will be able to do that the old one won't. The lack of a GPS receiver means it won't be able to deliver turn-by-turn directions with the new iPhone's accuracy. And the old phone's relatively poky data connection means applications that rely on a connection to the Internet will crawl along without access to a wi-fi hot spot.

Nevertheless, one of the easiest criticisms one can make of Apple--that it moves to bump off older models with stylish new ones as often as it can--doesn't hold up this time. The old phone looks a lot like the new one. And once you update the software, it will work a lot like the new one as well.