I have the same problem with my phone where the phone's app store says I'm up to date and iTunes has updates. I have noticed that my phone is spotty (3G) with updates through the phone, but my wife's v1 updates them all. So then I started to realize that the ONLY apps that would update on my phone were the ones I downloaded from the app store on my phone, but all apps would update through iTunes. Now with my wife's v1, all of her apps have been downloaded through the phone. So my only guess can be that some how that phone only looks to update apps that were first put on the phone through the phone's app store and not ones put on the phone through iTunes. Now to add to this, it's actually specific to the current phone, meaning that apps I put on the phone through the phone on another phone that has been replaced by warranty also will only update through iTunes. So far on this current replacement, I've only installed 4 apps on it and those are the only 4 out of 40 that updates through the phone. Now I don't know if ts just my phone or if this is true for all of them.