i) Digital zoom at a minimum, we’re starting to see optical zoom on some camera phones, but I doubt that’ll happen.
ii) A higher number of megapixels: 5MP seems to be the general trend at the moment.
iii) A flash!

In good lighting conditions, and when the subject matter remains perfectly still, the camera takes some pretty good shots, but in general it is a large disappointment. Perhaps Apple deliberately held back in this area?

I’m hoping that the (impending) Feb update will add some of those features or at the least have the ability to add some of these feature with the release of the developers kit.

Also wanted to say that while yes Apple is new in the mobile phone industry, that’s a poor excuse for not knowing how mobile phone users use their mobile devices. The partnered with AT&T and had them by there side through the majority of the development. AT&T dropped the ball in getting the small, but important features out. I’m sure the next gen iPhone will be much better in that respect.

1.Put in a 3.2 or even 5 MP camera
2.Video capability and flash
3.16 GB overall memory

Apple is starting to recover from their mistakes in the debut release of the iPhone though. They’ve cut prices and canceled their 4GB model which is just way too small a capacity for a multimedia / cell phone device these days. And last but probably most important of all, they’ve announce that an iPhone Software Development Kit will be released in February 2008. For me, this is a critical step. The iPhone SDK will give third party developers what they need to create both fun and useful applications for the next generation iPhone 2.0.

I think 2008 will be a very productive year for Apple Inc. In 2007 they’ve shown that they are very capable of penetrating new markets beyond the realm of personal computing. I hope they will take a step back in 2008 to figure out what they need to do in order to really refine their products and make them even more innovative and useful than they already are.

In order for apple to break the cell phone industry they will have lower prices even furuther on lower Iphone grade such as 1.0 and then keep prices within rational prices for any future models such as 2.0 - 5.0.

I believe that cell phone customers for the most part are not going to too interested in spending half a grand thinking that they got the “Jesus Phone”. Just to find out that Apple lowered on that same phone and are going to be coming out with 2.0 and perhaps 3.0 or even 4.0 with the next year. It is very unlikey that people are going to put up with that in a cell phone. People usually stick with their cell phones for 1-2 years before considering a new verison.

Also . . .The price for the Iphone 1.0 at 399.99 would have been great if it were the only phone that they were not coming out with. I see apple pricing people out of the Iphone market and frustrating customers wanting an Iphone with new releases and inflated prices. I just do not see cell phone customers paying much more than 500.00 for any type of cell phone no matter what it is like. After $500.00-$600.00 you are better off buying a laptop with a wirless connection plan and having a cell phone on the side. Apple should keep this in mind that the Iphone are not like ipods where you can own and use multiple ipods. Most people only have and need one moblie phone.