Apple quietly released the latest version of its iPhone operating system this past week.  Naturally, it comes with a couple of notable updates, amidst some new restrictions that might cause a few users to hold back on upgrading.

What's the biggest drawback?  Apple has pulled the plug on free, unauthorized tethering and has blocked off all access to the Cydia app store.  That means flashing the firmware to use your iPhone as a wireless modem will no longer work.  Neither will anything that has to do with Cydia, including all unauthorized apps you've gotten from there (all will be flushed).  Worse, if you unwittingly upgraded to 3.1 from 3.0 and are only finding about the restrictions now, you're screwed.  There's no way to revert back to the previous OS version.

So what do you get that's not a death spell to enjoying your phone?  OS 3.1 comes with the App Genius, a recommendation tool  to help you find new software in the App Store's 75,000-strong-and-growing library.  It works in a similar way to the Genius feature in iTunes, analyzing your installed apps in relation to other users' and coming up with recommendations based on that.  A caveat is it does not take how you rated apps into account, nor does it check ones you've deleted, so it's likely to recommend plenty of bad duplicates (especially if you've downloaded a ton of apps in the past).

Another great addition is the new ability to organize your iPhone's apps directly from iTunes 9.  No more thumbing through pages and lists on your touchscreen - do it all from a comfortable computer.  A few other smaller updates came with 3.1, but the loss of tethering and Cydia can be a dealbreaker for more than a handful of users.  Of course, these will all likely be sorted out by the hacking community in a couple of weeks and none of the positive updates are vital to using your iPhone, so those who are still wary can just sit on upgrading for now.

Below is a full list of upgrades to 3.1, according to Apple:

• Improved syncing for music, movies, TV shows, podcasts, and photos
• iTunes U content organization
• Redeem iTunes Gift Cards, codes, and certificates in the App Store
• Display available iTunes account credits in the App Store and iTunes Store
• Save video from Mail and MMS into Camera Roll
• Option to “Save as new clip” when trimming a video on iPhone 3GS
• Better iPhone 3G Wi-Fi performance when Bluetooth is turned on
• Remotely lock iPhone with a passcode via MobileMe
• Use Voice Control on iPhone 3GS with Bluetooth headsets
• Paste phone numbers into the keypad
• Option to use Home button to turn on accessibility features on iPhone 3GS
• Warn when visiting fraudulent websites in Safari (anti-phishing)
• Improved Exchange calendar syncing and invitation handling
• Fixes issue that cause some app icons to display incorrectly

Cydia, the popular package repository of third-party apps for jailbroken iPhone and iPod Touch devices, is evolving its services.   With the growing number of developers creating high-quality apps specifically for modified iPhones, Cydia creator Jay Freeman (also known as Saurik) is rethinking his model and looking to dive right into the paid app business.  With every mobile platform - from Blackberry to Nokia - looking to follow into Apple's profitable App Store setup, after  all, why couldn't the jailbreakers build one of their own?

Currently, you can use Cydia to pretty much get any app you want, provided you knew the right "Sources."  As you can expect, the medium is thoroughly used (and abused) by those unwilling to pay for software.  Paid apps are no strangers to the platform too, although each developer currently needs to setup their own payment process individually.  With a Cydia app store, paid jailbreak apps like Cycorder, Snapture and PDANet can all be obtained from a single location, along with the potentially rich set of new and innovative apps such a move is bound to inspire.

Moving from Cydia's current setup towards a full-featured app store isn't likely to be difficult, considering much of the functionality (save for the payment system) is already in place.  Freeman isn't shy about the goal of the move, either, blatantly stating it's intention to provide iPhone owners choice, not to mention putting a good amount of app sales commission in his pocket.

It's difficult to imagine Apple reacting in any way but negatively to all these.  The Cupertino guys have already claimed jailbreaking to be an illegal activity, from which Cydia will now openly (and overtly) be cashing out of.  Aware of the potential repercussions, Freeman has already hired a lawyer and looks ready for the battle that will inevitably ensue.

Source: Gizmodo