A few weeks ago there was a quick poll among developers about how to start an iPhone User Interface Design. You can read the results at: http://deanonsoftware.com/?p=73.
The funny point is that nearly 2/3 of developers use just paper and pencil.
The new release of iTunes 9 includes an improved iTunes Store. I still have to check the improvements over the old App Store, but they looks good so far. Apple's also included Genius functionality to suggest new apps based on what you've purchased.…
More funtionality does not mean a better phone. The difficult point is to provide the functionality that 90% of the people needs 90% of the time. And there, iPhone is still the winner.