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.

Several early iPhone 4 customers have discovered critical issues with the phone’s display and reception that could pose major problems for Apple’s newest mobile device.

Multiple Apple- and gadget-focused websites are receiving reports that the iPhone’s much-discussed “Retina Display” is susceptible to a yellow discoloration, either as a thin line of yellow or as a circular tint.

That’s not the only problem: there are now countless videos online that show how holding the new iPhone by its sides can decrease reception quality.

We’ve received a growing number of tips about these complaints, as well.

Message board threads on Macrumors are buzzing with negative reviews of the discolored iPhone 4 screens. Here’s an excerpt from a community member:

“Just synced up my iPhone 4 and noticed that, on screens with a white background (i.e., Settings.), there is a decidedly yellow spot on the lower left corner of my screen. It appears circular (about the size of a pencil eraser) but when you rotate the phone sideways, it’s more visible as running across the bottom edge of the screen a ways.”

Gizmodo is also getting a flood of complaints and currently counts more than 27 cases of Retina displays demonstrating the yellow tint problem. Apple has dealt with this problem before with its 27-inch iMacs. It’s unclear what is the cause of the issue at the moment, nor is it known how widespread the problem is.

The second problem affects reception. As Gizmodo reports, dozens of iPhone 4 owners are finding that their reception drops dramatically if they hold the phone by its metal sides in two places. The metal bands of the iPhone 4 also act as antennas for the device.

There are now dozens of videos and tests demonstrating that the iPhone 4 loses bars, call quality and download speed when held by its sides. In some cases, the iPhone 4 completely loses reception. Again, it’s unclear just how widespread this issue is. Our guess is that it’s a hardware problem, which means a lot of iPhones could be affected.Issues are to be expected when new devices go to mass market, but Apple’s devices don’t usually have problems as critical as these. These flaws likely will frustrate a lot of users and could even force Apple to replace or recall phones, depending on the root cause of these problems.

For now, we’re in wait-and-see mode as the phone permeates the market. We’ll keep you updated on any other critical issues that we discover.