Google Reader Mobile (Sorted by Magic)
The two easily-recognizable updates to mobile Google Reader are the introduction of "Sort by Magic", which prioritizes content based on your own interests, and a new, extremely helpful, feature that puts a "Next Item" link at the top right corner of every single feed item, letting you quickly click from one update to the next. This is much how I use the "J" feature on the Web version of Reader to "Jump" to the next item (a few hundred times a day), but built with today's smartphones in mind, including the iPhone, which, as you know, lacks a physical keyboard.
The "Sort by Magic" functionality, missing in the prior Mobile updates, helps to bring the feed items to the top that Google assumes are most interesting or relevant to you, thanks to their watching your reading, consumption and sharing activity over time. While I do manage to read every feed item in my Reader, and never mark all as read, the benefit of getting the "best" updates" quickly on the iPhone is more important than on the Web, especially when you consider a smaller screen, potentially lower bandwidth, or less time. (And yes, these are some of the same reasons why my6sense, a company I advise as part of Paladin, is interesting - although my6sense also sorts social updates, beyond RSS)
Stuck at the San Jose airport this afternoon, on my way to Denver for a connecting flight to Austin for SXSW, I pulled up the new Mobile Reader and found the "Next Item" addition to be a huge help as I navigated my feeds, and shared several out to the link blog. To date, I've primarily relied on my6sense to get my RSS feeds while mobile, and haven't found the Google Reader mobile equivalent particularly compelling. These two updates make the offering a lot more usable for me.
In parallel, I also got a note from Mihai Parparita and Brian Shih on the Google Reader team, saying the company implemented a fix for the desktop version of Reader that should speed boot-up times for accounts with lots of followers (which Robert Scoble and myself fall under). I haven't been grousing about any slowed start times, but will soon check it out and hopefully appreciate its benefits.
You can find the new Google Reader mobile on your handset here: http://www.google.com/reader/i/.
Disclosure: My6sense is an assumed competitor to some aspects of Google Reader, and My6sense is a Paladin Advisors Group client, where I am managing director of new media.