UPDATED: SAN FRANCISCO -- Not every company would risk blasting Jerry Lee Lewis' "Whole Lotta Shakin' Going On" to a packed crowd in earthquake-prone Northern California, but Apple likes to live on edge.

The Moscone Center here was the scene for Apple's much-anticipated rollout of its newest iPhone, kicking off its weeklong Worldwide Developer Conference (WWDC).

Steve Jobs and friends didn't disappoint, focusing the two-hour keynote on the iPhone. The keynote audience for the sold-out (5,200 attendees) WWDC included former Vice President and current Apple board member Al Gore and a host of Silicon Valley elite.

In a session later today closed to media, Jobs said Apple (NASDAQ: AAPL) would preview details of Snow Leopard, the next version of the Mac OS X software.

So with the iPhone taking centerstage, the big announcement was a dramatic price drop to $199 for the new standard iPhone 3G with 8GB of storage and two-year service commitment. Another change: Apple and partner AT&T now require activation at time of purchase, so those who want to unlock the phone and use another carrier will have to pay AT&T/Apple first.

Unlike the earlier model, the iPhone 3G now includes a built-in GPS. "Location services are a very big deal," Jobs said.

"The basic outward design hasn't changed much, though the iPhone 3G is a little thinner at the edges. Proving he didn't need to do much to win over the crowd, Jobs drew huge applause saying the headphone jack is now flush to the side. (This is actually significant since you can now use standard headphones on the iPhone for the first time).

The current iPhone, which Jobs confirmed is completely sold out, had been selling for $399. Apple's marketing campaign for the phone includes the slogan: "Twice as fast, half the price."

A new 16GB model costs $299 and comes in either the standard black or a new white version. Jobs said $199 for the 8GB version will be the most Apple charges for the standard model in any of the countries. Both are set for release July 11 and will be available in 22 countries with more to follow later this year

The bulk of the presentations focused on new applications and a recap of enterprise support in the iPhone 2.0 software Apple previewed in March along with its software development kit (SDK).

According to Jobs, 35 percent of Fortune 500 companies are already participating in the beta SDK program. He said there'd been more than 250,000 downloads of the free SDK since its release in March.

But the demand is apparently proving to be a bit too much for Apple. Jobs said more than 20,000 developers had applied for the paid service whereby Apple approves applications for participation in its forthcoming Apps Store and manages the distribution, hosting and payments, taking a 30 percent cut of the sale price -- though developers can also distribute free applications at no cost.

Jobs noted that Apple's admitted only 4,000 of the 20,000 applicants so far but didn't elaborate on the cause of the logjam.

The iPhone 2.0 app will feature built-in support for communicating with Microsoft's Exchange Server via ActiveSync, push e-mail and calendar, as well as the ability for IT departments to remotely wipe clean iPhone's that have been lost or stolen.

Don Rainwater, an assistant director of IT at University of Cincinnati, was one of those in the crowd happy to hear about the improved corporate support. "The Exchange support is a big deal because there's a lot of interest in the iPhone on campus," he told InternetNews.com. "And the price drop is a great step."

On the entertainment side, Sega and several startups showed some colorful, graphically rich games that take advantage of the iPhone's accelerometer technology, letting the user move the device as a way to control the action, score points and reach higher levels. Digital Legends Entertainment previewed its action-adventure fantasy game KrollNext page: Must go faster

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