Google has quietly released a beta of its improved iPhone reader. I've only been using it an less than an hour but can already attest it is an improvement over the prior version. I do all of my newsreading through Google Reader. This arises partly from the way I read news.
iPhone as Triage
I frequently find myself stuck places and often will "triage" my news feeds clearing out articles I'm not interested in and starring other's for later reading. The trouble with the prior version of the iPhone google reader was that starring an item required the page to re-load which slows down the process and could be annoying. With the new version it works just like in a conventional browser. There is an empty star next to the headline and you can light it up with the touch of a button. This is both more intuitive and faster.
Once I go through and star the items I want to read in detail I clear out everything else. Quite often the actual reading takes place at my Mac, but not always. In addition to a better system for marking articles, the interface is a bit cleaner and the "Feeds" button also includes tags for starred items, notes, and shared items. Overall, it is a significant improvement.
In terms of beta stability, it hasn't given me any trouble in the one-hour workout I gave it. It is beta however, so use at your own risk. You can check it out by pointing your iPhone/iPod touch at google.com/reader/i/.