Keynote 3 finally includes a functional slide sorter that lets you select any subset of slides and drag them anywhere in the current presentation or into another open presentation. The individual slides are larger than the Navigator's tiny thumbnails, but they're still too small for many eyes -- Apple ought to add a sliding magnification control like the one in iPhoto.
Presenter Display, which shows the current and upcoming slides on the presenter's screen, now has a menu-bar indicator that shows when Keynote is ready to display the next slide. Another new option lets you use Expose and Dashboard during a slide show, so you can easily switch from your presentation to an application or a widget. Keynote 3 also gives you greater control over QuickTime movies while they're playing in slides.
Keynote's new comment feature lets you add text notes to slides -- handy if you collaborate on presentations because comments stay hidden when you run the slide show. If you have to share your presentation with people who don't have Keynote, you can now export your presentation to iDVD or as HTML, and new PDF-export controls include the option to save every stage of a build on a separate page.
Missing in action
Despite its many improvements, Keynote 3 suffers from a few omissions. For example, it doesn't let you interact with QuickTime VR movies during a presentation, and you can't embed hyperlinks to applications or documents. Unlike PowerPoint 2004, Keynote doesn't let you record narration for slide shows unless you use another application, and its support for audio files that span multiple slides is limited. Keynote's uncluttered interface is more accessible than PowerPoint's, but controls for setting attributes for text and graphics are spread across several Inspector tabs. Although you can cut and paste styles between objects, Keynote would benefit from a palette with named styles.
Keynote 3 can read older presentations, and an option in its Save dialogue box lets you save in iWork '05 format. But there's a bug that alters the formatting of text in older imported presentations, which you must then manually clean up - Apple is aware of the problem and promises a fix.
Summary: The latest version of Keynote builds on its predecessor's considerable strengths while making a sizable dent in a shrinking list of missing features. If you're new to Keynote, or if you are still using Keynote 1.1, iWork '06 is well worth its price. Keynote 2 users may grumble about Apple's lack of upgrade pricing, but Keynote 3 lets you do things that would have been difficult or impossible to do before, or that would have required another application. For many presenters, that's enough to justify the price.