Following a year of speculation, iPhone 3G was officially launched today at half the price and with a slew of new applications and features. At Apple’s sold-out Worldwide Developer’s Conference in San Francisco, CEO Steve Jobs kicked things off with news that the new version of the device would retail for $199 for an 8GB handset and $299 for the 16GB model in white or black and will include location-based services (LBS), as well as new enterprise features and applications through the software developer’s program.

Jobs told attendees that the iPhone, coming up on its one-year anniversary, has changed mobile phones forever and that its current owners love the handset, with 90% customer satisfaction. Jobs said the next objectives for the handset were a faster network and more affordable device. Hence, the introduction of iPhone 3G, available on July 11.

The new handset features a black, full-plastic backing, thinner edges, solid metal buttons, improved audio, a flush headphone jack and, of course, faster download speeds. A demonstration had a Web page on a 3G network loading at 29 seconds, while the EDGE network was still trucking along for 59 seconds. Similarly, an email attachment took only five seconds versus the EDGE’s 18 seconds – approaching Wi-Fi speeds, Jobs said, and 36% faster than Nokia's N95 Smartphone. The 3G version will also feature better battery life – with standby of 300 hours, talk time of five hours and five to six hours of 3G browsing.

As many anticipated, GPS will be built into the 3G handset. Jobs said that LBS is set to explode, and now the phone can get location data from cell towers, Wi-Fi and GPS allowing it to track to the exact location.

Leading up to today’s conference, Apple has also been focused on expanding its international presence, inking exclusive deals with carriers in six countries. Apple’s new goal is to have 12 countries for the iPhone 3G, with a long-term goal of 25, Jobs said, adding that Apple will roll out the iPhone 3G in 70 countries in the next several months.

On the application front, Jobs told attendees that in the 95 days since the SDK was announced in March, Apple has had more than 250,000 developers download the free SDK and more than 25,000 people apply to the pay-developer program, of which 4,000 were admitted. The Beta program garnered 35% of Fortune 500 companies to participate. As of today’s conference, a new UI object-oriented framework, called Cocoa Touch, will simplify building an application for the full-screen touch UI, according to Scott Forstall, Apple’s vice president of software. Xcode, Interface Builder and iPhone Simulator were introduced as apps to use for coding, debugging and testing the programs set to run on the device.

“The SDK is something that hasn’t really been talked about a lot lately – it’s gotten lost in the hype of the other features – but it should be pretty interesting and compelling because it will make the device from a phone into a lifestyle accessory, which is something its been lacking so far,” said Yankee Group analyst Josh Martin in a pre-keynote interview. “That will help them target niche audiences looking for features that in and of itself, the iPhone doesn’t offer.”

A slew of third-party developers took the stage to demo their iPhone apps, including Sega with Super Monkey Ball with 110 stages, which will be available at the launch of the app store for $9.99. EBay was also highlighted, as was social networking site, Loopt and mobile blogging app TypePad, both available for free from the App store. The Associated Press demoed a news-fetching app, followed by Mac game developer Pangea Software and Moo Cow Music’s Band app, a collection of virtual instruments for music creation. A real-time sports app from MLB.com, two medical apps and a 3D game from two-week old Digital Legends Entertainment were also shown on stage.

The developer parade ended by announcing a push notification service that Apple will provide to all developers to replace Windows Mobile. The unified notification service, available in September, will allow developers to automatically launch an app by hitting a button. It works over the air or in Wi-Fi. In addition, a new wireless email service called MobileMe, will allow users to store their info, email, contacts and calendars, so they can get to it from any device – Mac, PC or iPhone. MobileMe will replace .Mac. and is available at 20 GB of storage for $99 per year.

The enterprise space is another area where the weaknesses of the first-generation iPhone will be addressed with the 2.0 version, which now features full Exchange support, secure VPN and built-in features such as a contact search, full iWork document support for viewing Word, Excel and Power Point and the capability for bulk deletion and moving of emails. iPhone 2.0 also allows users to save images from an email to the photo library, parental controls, character recognition and a scientific calculator activated by turning the phone into landscape mode.

Bill Ho, research director for wireless services at Current Analysis, said that the launch will help push over a lot of the fence sitters, who are waiting for the 3G version to be launched to make their purchase. In the same respect, the groundwork for the enterprise has already been laid out and the company is already seeing an uptake in individual liable clients that want the iPhone as their corporate device as well.

“They’ve realized that even though it doesn’t really heap into the Blackberry market, there is obviously an opportunity,” Ho said.

In hopes of giving Research in Motion’s Blackberry a run for its money, Jobs is giving enterprises another way to distribute the iPhone applications – themselves. Through iPhone Enterprise app distribution, companies can authorize iPhones and then create and distribute apps on their intranet that can only run on those phones. Users then obtain the apps through syncing to iTunes. Now, a third way to distribute apps is Ad Hoc, Jobs said, citing an example of a professor teaching how to develop iPhone apps in a class.

The iPhone 2.0 software, to be released in July, will be available free to all iPhone owners and for $9.95 to iPod Touch owners. The App Store icon will automatically tell iPhone owners when there’s an update for apps they’ve downloaded. As for application revenue distribution, developers will keep 70% of the revenues with the remainder going to Apple and its partners.

“Now, we've enlarged the scope of the App Store from the 22 countries it was going to be in, it's going to be in 62 countries – so almost anywhere in the world where there's an iPhone,” Jobs said in his keynote address. “If your app is 10MB or less, they can download it over cell, WiFi, or iTunes. If it's over 10MB they can get it on WiFi or iTunes. So that's the App Store. We think there's never been anything like it."

Apple’s inherent hope is that the new 3G iPhone, as well as the software upgrades announced today, will prove to be the catalyst to reaching its goal of selling more than 10 million iPhones by the end of the year. Thus far 1.7 million have been sold in 2008, totaling more than five million since launch.