Few things represent Yahoo’s missed opportunities more than its mishandling of Flickr, especially in mobile. While Facebook built an empire largely around photos and added Instagram, a mobile-first photo sharing service, Flickr’s iPhone app has resisted a lot of mobile and social innovation. And its #104 ranking in the App Store photo and video category reflects that.

But Yahoo is ready to compete again in the mobile photo market, which continues to heat up with Twitter’s addition of photo filters this week. Flickr is rolling out a new iPhone app which it hopes can make the photo service a daily destination for mobile users. The overhauled app is packed with upgrades and design changes like better social sharing, photo editing (yes, filters) and discovery tools that finally make Flickr competitive in mobile. But is it too late? I worry that it is, but there’s enough there to make me wonder.

Here’s a look at some of the upgrades:

• Flickr users can now share out to Facebook and Tumblr and it has easier sharing through Twitter now. That seems like a no-brainer but the Flickr app wasn’t particularly social before. Now, even the sign-in is designed to rely on Facebook though users can also log-in with their Yahoo account.
• Flickr offers editing tools via Aviary, which also provides the tools for its website. Users can just apply one of 16 filters or they can go deeper with tools for enhancing the shot, cropping it or adjusting for brightness, contrast, redeye, etc. This allows Flickr users to get in on the filter craze if they want.
• The photo viewing experience is improved. Users can zoom in on shots, which are kept in high resolution and they can tilt their phone to go full screen. You can tap on an image to see the details of the shot, kind of like viewing the back site of a photograph. Flickr has applied its justified web view, so images are also stacked up nicely together when viewing a photo set.
• Flickr is emphasizing more discovery of photos. So now, users can get two streams of photos to check out. There’s a contacts/group tab that lets you browse through photos from friends and the groups you’ve joined. Flickr recommends photographers and groups to follow if you don’t have a lot of them already And there’s a new Explore tab that lets you see interesting and nearby photos. I actually like the Explore tab because it’s a pretty awesome set of photos and shows off how Flickr is a repository of really high-quality images.
• Uploading images is easier now since there’s no limit to how many photos you can upload from a camera roll. Previously, you were limited to ten photos at a time. Also, users can still enter data about a photo and that now includes venue information through Foursquare.

Taken together, this is a huge set of improvements for Flickr. It’s amazing that the previous iPhone app was basically untouched for the last year. The new improvements help Flickr reassert itself as a player but the market has moved on in a lot of ways. People have flocked to very simple mobile photo sharing services like Instagram, Mobli and others. Facebook and Twitter are also very much in the mix. Flickr is still popular with serious photographers but it has to work hard to remind people it’s great for the kind of fun sharing that is the norm now for many smartphone users.

Markus Spiering, Flickr’s head of product, understands that Flickr has fallen behind in mobile. But he said the team has been working to get it right in mobile, which he said is now a huge focus for Flickr. And Flickr is still a popular destination for photo lovers, with 80 million monthly users and more than 8 billion photos. The challenge is for Flickr to regain some relevance in mobile while still being known as a great place to store and manage big, quality photo collections.

“We see Flickr as a place where people want to share photos for the community around photography but we really take care about the image quality and integrity,” Spiering told me. “While we have a lot of these value that are unmatched, what we are now doing is creating a compelling mobile experience for that.”

This is something Flickr should have done from the start. It was a leader in photos before Facebook and Instagram, but it didn’t embrace mobile and social. Doing so now is necessary but I’m doubtful if Flickr can make up for lost time. But it’s nice to see Yahoo shipping some solid updates now. That’s two in two days along with yesterday’s Mail update.