my app is super slooow on iPhone 3GS

Just curious, are you running your game in debug or release mode?

I am running in debug mode. Here is the latest - I think it is a combination of some coding bugs ( I had to clean up my collisions code and some movement code), the frame size (I had to reduce it by 3 times) and a number of active objects in the level.
I think the number of actives is the biggest factor here. I am thinking about creating some of them during run time outside of the frame window. I finally managed to run it on iPhone pretty smooth, but not all of the code is in yet.

Mobo - Running in Debug mode will always slow your game down DRASTICALLY. Try release mode, it should speed things up. Check this thread, it has all the little tricks on speeding your game up - http://community.clickteam.com/showthread.php?t=65324

I just found out that it runs pretty smooth and fast on my son's iPod. Still trying to get equally fast on iphone....getting closer. Reducing the number of active objects helps a lot.

I find it best to avoid fast loops and if you must, use them for infrequent events like setting things up. The ForEach object is now available on iOS, not tried it out for performance yet, but if you are previously using fast loops with spread a value to work on each instance of an object, then try ForEach because it will work a lot faster for that. Other than that, I try to make use of what MMF provides and try not to overcomplicate how I do things.

I've been testing all my games on an iTouch 2nd generation device as well as newer, which is always good to do if you are conscious about supporting older/slower devices. It is pretty useful to do this while you develop, because it helps identify things you are doing that is slowing the game down sooner, which means you can do something about it and your higher end devices should benefit.

I ended up creating two versions: one stripped down for iPhone 3gs and another beefy one - for iPod and faster iPhones.