The products come on the heels of Apple's launch last month of a service that lets iPhone and iPod users rent and download movies to watch on their devices.

'There are a lot of users out there for whom there is never enough memory,' said Mr Greg Joswiak, Apple's head of global marketing for iPod and iPhone.

'We've given people more and more content that they can put on their iPhones,' Mr Joswiak said on Tuesday.

Apple, which said in January that it had sold more than 4 million iPhones since sales began last June, will now offer an iPhone with 16 gigabytes of flash memory, the kind that stores data on microchips instead of a spinning disk drive.

The iPod touch, a wireless touch-screen device that plays music and videos, adds a 32-gigabyte model.

Both of the new devices will sell for US$499 (S$709), Apple said.

Apple will continue to sell its iPhone with 8 gigabytes of memory for US$399. A 16-gigabyte version of the iPod touch remains at US$399 and an 8-gigabyte model, at US$299.

The updated models come amid a slump in Apple's stock, due to fears that a United States recession could make consumers less likely to buy its iPods, Mac computers or other products.

Asked whether Apple expected the new models to boost sales, Mr Joswiak said: 'We always put our products out there and hope the market likes them. The higher-capacity models have always done well.' -- REUTERS