The app does what was touted this year at the iPhone 3.0 event: display notifications when the app is closed, show you how many outstanding messages you have and basically keep you "connected" to the AIM service even when you're not actively using the app. The free version is here and the pay version is here.

We personally would go with the free version until the pay version of the better IM apps (Beejive, for example) go live. Boy Genius says it's live now, but we're still seeing the old version in the store. [TechCrunch]

No, it doesn't use Apple's long lost push notifications. Instead, it uses SMS notifications, for up to 24 hours after you sign out of the iPhone app (you can pick shorter intervals, as well as limit to pinging you only when you get IMs from new buddies, not the people you were just talking to). Hopefully, they'll get a bit more sophisticated, since right now they just tell you to fire up AIM 'cause you got mail.

Other notable new stuff—free SMS texts to anyone in iPhone contact list, multiple account support and location awareness, so you'll see buddies in a special new group called "near me." (You can limit this to buddies, everyone or no one.) It seems to be a little bit more responsive than I remember, too.

Also, AIM is splitting into a paid and a free ad-supported version. So far, I've just seen occasional pop-up on the bottom of my buddy list, but nothing while actually IMing, so not too annoying. If you hated AIM before, you're not gonna like it now, but it's definitely better. [iTunes, Hat tip Ars Technica]