PalmOne has launched its latest PDA, claiming to have more storage capacity that any other handheld on the market - a whopping 256MB.

The $399 Tungsten T5 uses Flash memory and includes a file-transfer system, which allows mobile workers to transfer files and folders between their desktop computer and Palm device.

The drag-and-drop File Transfer application opens a window on the desktop, so users can drag a file to the handheld's internal hard drive and open a Word, Excel, or PowerPoint document.

PalmOne is also promoting the use of the T5 as a removable USB drive. Users would select Drive Mode on the handheld, hot synching via USB with a desktop, to copy, move, rename, delete and manage files. The T5 connects via USB or Bluetooth. However, despite speculation, PalmOne has chosen not to add Wi-Fi or cellular capabilities to it.

Rob Enderle, principal of Enderle Group, said there are other PalmOne models with either Wi-Fi or cellular built in. "The T5 shines as half of a really good solution. The other half is a Bluetooth cell phone to connect the two," Enderle said. The device comes with a Bluetooth wizard, which enables users to associate the T5 with most Bluetooth cell phones.

The T5 TFT color display is the same as the previous T3 model with a 320 pixel by 480 pixel display. The device also comes with a 416-MHz Intel XScale processor. The device still uses the old, less-capable Palm 5.4 OS rather than the newer Cobalt 6.0 or 6.1 OSes from PalmSource.

According to Enderle, savvy users will want to wait for the new OS. "This is a tweener product with a brilliant industrial design, but the folks in the know will want to wait for Cobalt," Enderle said.

Stephane Maes, senior product line manager for handhelds at PalmOne, insisted there was no need to go to the newer OSes. "We've done everything on top of the current OS like File Transfer. In terms of OS 6, you're not going to gain anything," Maes said.

Other features of the T5 include support for MultiMediaCard, SD and SDIO expansion cards, a five-way navigator for one-handed operation and a new Favorites page for placing important files on the opening screen when the device is turned on. PalmOne has also introduced a stiffer wireless keyboard that can be rested on a users lap.

The Tungsten T5 ships on 3 November.