In 1987 the C128 became the best selling home computer in the world, taking the title from the then discontinued C64. That year Atari released the Atari Amiga 500, having outbid Commodore and purchased the Amiga company. The Amiga had far superior capabilities but also a higher price tag. Jack Tramiel, Commodore's president, believed the public wanted something cheaper and so commissioned another 8-bit successor to the C64. He named it the C256.
In keeping with the naming tradition, it had 256kb of RAM.
The VIC-II F graphics chip, while not competitive with the Amiga, was a substantial upgrade over the VIC-II E. It was still limited to 16 colours, but the old haphazardly chosen muted palette was replaced with one designed by artist Arne Niklas Jansson.
Many new screen modes were introduced, in both 4:3 and 16:9 aspect ratios. However since most gamers still had 4:3 displays the recommended mode was 416x256, a compromise of 1:1.61, the golden ratio. Some programmers did release software intended for 16:9 displays, with a resolution of 480x270. (Unfortunately this mode does not scale well to modern 720p screens, although it is fine at 1080p). There was also a high resolution mode of 640x360.
It supported 256 sprites, each 16x24 pixels and 4 colours. There was also hardware support for tiled backgrounds using 8,16 or 32 pixel tiles.
The system font was unchanged from the C64.
A major innovation was the new game controllers. They had 2 thumb sticks, 2 triggers (i.e. 6 analogue axis inputs) and 14 digital buttons, in a layout that would later be adopted by Sony for the Dual Shock PlayStation controller.
As Commodore lost market share to the Nintendo Famicube, in 1989 they upgraded the C256 to support 64 colours in all display modes, and copied the palette of the Famicube!
An upgraded version of the VIC-20, released shortly before the C64 in 1981 and soon discontinued. It had a fixed screen mode of 320x180 and used the palette that would later be adopted by the more successful C256. Sprites were limited to 2 colours. The RAM capability was the same as the VIC-20 except the full 40kb was provided as standard.
In addition to the standard Commodore font it included a tiny 4 pixel high font.