The update provides a variety of enhanced usability features, as well as fixing more than 40 serious security vulnerabilities.
Eagerly-anticipated new features such as cut-and-paste, spotlight search and a landscape virtual keyboard are bundled with patches for 46 vulnerabilities, many of which could allow malicious code to run.
Exisiting iPhone users can upgrade their device for free via iTunes, but iPod Touch customers will have to pay $9.95.
Although the devices have proved popular with consumers, business support has been slower due to security and compatibility concerns. iPhones are often cited as a potential attack vector, but no malicious attacks are yet in the wild.