Apple on Tuesday launched an upgrade of the iPhone operating system that fixes some nagging bugs and refreshed the iPod line with new designs and lower prices expected to attract buyers during the holiday shopping season.

Steve Jobs, chief executive and co-founder of the computer maker, made the product announcements in a packed auditorium at the Yerba Buena Center for the Arts in San Francisco.

Jobs kicked off the event with the words "The reports of my death are greatly exaggerated" projected on a large screen. Jobs' gaunt appearance during his keynote at the company's Worldwide Developers Conference in San Francisco in June had sparked speculation that Jobs, who had been successfully treated for cancer, was ill.

"Enough said. Let's get on with the real topic this morning," Jobs said with the projected sign behind him.

The "real topic" was a refreshed iPod line and an upgraded operating system for the iPhone 3G and the iPod Touch. Version 2.1, available for download Friday, is expected to result in better battery life and fewer application crashes and dropped calls. "We fixed a lot of bugs," Jobs said.

For iPhone and iPod Touch customers with version 2.0 of the OS, the upgrade would be free. For Touch customers who have not yet upgraded to version 2.0, the latest upgrade would cost $9.99.

The iPod lineup was upgraded with new designs and features. The design of the new iPod Touch and iPod Nano is thinner and curved, with a new "genius" feature that can create a playlist of up to 100 songs similar to any tune chosen from the user's music library. In addition, the Nano has a new "shake to shuffle" feature to start playing songs at random.

Michael Gartenberg, VP of mobile strategy at Jupitermedia, said the iPod improvements were "evolutionary with some revolutionary new features" that were expected to help Apple hold on to its dominant position in the music distribution business. The iPod accounts for more than 70% of the market for portable players, and the iTunes online store sells more music than any other retailer.

The genius feature is particularly interesting because it gives people the opportunity to listen to music they may have forgotten is in their library, while also suggesting songs they could buy on iTunes to add to the playlist, Gartenberg said. The new designs are expected to attract buyers because they improve the look and feel of the devices.

Jobs also announced new pricing for the iPods. The Nano, which is now available in nine colors, would sell for $149 for 8 GB of storage, $199 for 16 GB. The smaller model would be available this week and the larger model by early next week. The new iPod Touch, which is available as of Tuesday, would sell for $229 for 8 GB of storage, $299 for 16 GB, and $399 for 32 GB. The 16-GB model is the same price as the previous generation's 8-GB version, Jobs said.

The new prices placed the iPod on par in pricing with Microsoft's Zune, which recently had its price cut. "For the same price as the Zune, you can have an iPod," Gartenberg said. "For most of the market, that will be a very good value proposition."

Jobs also introduced version 8 of the iTunes software for accessing Apple's online store and for organizing music, video, pictures, and podcasts on the iPod and iPhone. The upgrade includes the ability to create genius playlists and introduces features to improve browsing songs in the store and library.

Apple also has added high-definition TV shows for $2.99 each. The shows can be watched on Apple's portable devices, a PC or Mac, or the Apple TV, which connects a computer to a home's digital television.

In addition, Jobs announced that NBC would once again sell its TV shows, such as The Office, Heroes, Monk, and Battlestar Galactica, through iTunes. NBC pulled its shows off iTunes last year in a dispute with Apple over pricing.