As expected, a massive upgrade to the iPod touch was announced earlier today at Apple’s special event. Although the most outwardly impressive revisions come by way of front and rear facing cameras and the retina display, perhaps more significant was the announcement that the device would house the same chip capably powering the iPhone 4 and the iPad — the Apple A4.

The A4 mobile ARM processor is of particular importance when considering Apple’s mobile future. With today’s revelations that Apple has sold 275 million iPods and that 1.5 billion games and entertainment titles have been downloaded on the iPod touch alone, it’s not a stretch to see why Game Center was a cornerstone of the presentation.

While Nintendo and Sony have both been busy manufacturing dedicated mobile gaming platforms, Apple has seized control of over 50% of the worldwide mobile gaming market with multi-function devices like the iPod touch. Although Apple has the market share, the more dedicated game design houses have, for the most part, stayed, in the Nintendo and Sony camps. For Apple to maintain market dominance, it’s going to have to start catering to more serious gamers, and that’s exactly what Game Center is all about.

A cornerstone of the presentation was codename Project Sword. Developed by Chair Entertainment, makers of the Xbox Live hit Shadow Complex, Project Sword will utilize the Unreal 3 engine, making it undoubtedly CPU-intensive. Despite all of that, let’s not sell its surface features short.

The A4 might be the linchpin of the device, but Apple has historically pushed more units based on looks than outright performance. The addition of a front facing camera to the iPod touch will put FaceTime in the hands of millions of new users, which could be enough to tip the scales toward actual usefulness.

Apple has just released the iOS 4 update for iPhone and iPod touch owners. The iPhone 4 might not be in stores until Thursday, but existing owners can take advantage of the new software features coming to the new device starting now.

iOS 4 is a free update and is compatible with iPhone 3G and iPhone 3GS models, as well as second- and third-generation iPod touches. Multitasking will only work with the iPhone 3GS and third-generation iPod touch, however.

On the backend, iOS 4 has more than 1,500 changes or additions to the API, which will enable developers to build even better apps on these devices. We’ll be posting a more complete video overview of what is new in iOS 4 later this afternoon, but check out some of the highlights first:

• Multitasking — A combination of persistent-state applications and backgrounding functions for certain services. The end result means better battery performance when doing things like listening to Pandorawhile browsing the web.
• Folders — Organizing your iPhone Home Screen is easier now that you can use folders to store groups of apps in one icon. This is a huge time-saver and makes finding and keeping more apps on your device much easier.
• iBooks — First appearing on the iPad, iBooks is now available for iPhone users. Just like the Kindle app, your purchases and page marks are synchronized across devices.
• Tap to Focus Video — iPhone 3GS owners can now tap to focus their videos just like you can when taking still shots. The new software also includes a 5x digital zoom for the built-in camera.
• Bluetooth Keyboard Support – You can now pair your iPhone with a Bluetooth keyboard, which will make typing long documents much easier.
• Better Spell Check – The spell check utility now works across Mail, Notes, Safari and other apps.

There are tons of other new features in iOS 4 and we’ll be showing them off over the next few days, as well as highlighting some apps that take advantage of the new features.

When will you upgrade to iOS 4? What feature are you most excited about?