I tried the new iPhone Kindle app moments after it became available on Apple’s App Store (AAPL), and my first impression is generally positive. But first, let me note the key features of the hardware Kindle that aren’t carried over to the iPhone app. It doesn’t support periodicals. It doesn’t read books aloud. It doesn’t allow you to enter notes or highlight text, look up words in a dictionary, or perform searches.

And, if you wish to purchase a new e-book, the Kindle app sends you over to the iPhone’s Safari Web browser to go the Amazon (AMZN) Web site; it lacks a built-in Kindle store.

However, it is a solid basic app for reading books, and is especially valuable if you already own a hardware Kindle, as I do. In my brief tests, the iPhone app synchronized rapidly and perfectly with my purchased library of Kindle books on Amazon’s servers, and allowed me to retrieve a previously purchased e-book, without paying again, just as my hardware Kindle does. It also synchronized to the furthest page I had read in that book on my Kindle. After reading for awhile on the iPhone, I performed that process in reverse, and my Kindle took me to the same spot where I had quit reading on the iPhone.

This means that, if I were in line at the grocery store with my iPhone, I could read a few pages of my book, and then, when I picked up my Kindle at home, I could continue reading, starting from the same spot.

I also was able to buy a new book using the iPhone’s Web bowser, and Amazon gave me a choice of auto-delivering it to either my Kindle or my iPhone, which it treats as just another Kindle. I did so, and it appeared very quickly. I later downloaded it as well to my Kindle.

Reading on the device was easy. You turn pages using the iPhone’s horizontal swiping gesture, and you can change the font size on the fly, and create bookmarks, which then can be synced back to a Kindle device. You can view any notes you made on a hardware Kindle. And there’s a slider to quickly go back and forth through chunks of the book.

The only flaw I encountered in my brief testing: if you turn pages too fast you get a fleeting blank page or two.

In two key respects, using the iPhone app seems superior to using a Kindle. First, the iPhone’s screen is brighter, and supports color, so book covers and illustrations in my test books looked much better on the iPhone than they did on the Kindle. Second, the iPhone is smaller and thus much more portable.

The new Kindle app isn’t as full-featured as some other e-reader apps for the iPhone, which do allow annotation, searching, and so forth. But it gets the job done and it gives you access to Amazon’s large catalog, which contains more popular and current commercial titles than other e-book sellers offer.

If you’re an iPhone or iPod Touch owner who has yearned for a Kindle but balked at its $359 price, or a Kindle owner with an iPhone or Touch already, this new Kindle app is a good bet, even if it is bare-bones.

The Biggest Pluses

Speed: Because the biggest problem with the original iPhone was the slow AT&T (T) network, moving the device to the much faster 3G network, while no surprise, will have a huge impact. This is especially true since data already show that it is by far the most heavily used smart phone for Web surfing. It means that you won’t have to search for a Wi-Fi network to do decent Web surfing.

Price: Less than one year after it was introduced at a hefty $599 price, the 8 GB model of the iPhone will now be two-thirds cheaper, at just $199.

Third-party programs: Until now, in order to get third-party programs on an iPhone, you had to hack it. Now, there will be hundreds of them coming soon, and the handful that were demonstrated by Apple looked impressive, from blogging-on-the-go, to news and sports, to games and even medical software.

The Biggest Minuses

Still locked to one carrier: Even though the greater speed is a huge deal, it only matters if you have good AT&T reception. If AT&T’s coverage in your area is poor, the iPhone is still a bad choice, because Apple, unlike its competitors, doesn’t sell it through multiple carriers in one market.

Still missing some features: They haven’t added a real way to cut and paste, or to save files, other than emailed photos. And there still isn’t any MMS capability–the ability to instantly send or receive media files over the phone network without resorting to email. There’s also no instant-messaging program, though third-party developers are likely to offer these.

Still has a wimpy camera: The original iPhone camera was OK, but, given the phone’s brilliant screen and tight integration with computer photo software, it could stand to be better. It isn’t in this new model.