Everything was a "designer-something" when I was growing up. But for all the pervasiveness of the word, "designer" was rarely about design. It was a celebration of superfluous detail, a point of identification, a label. Things came to a head some years later when I was once rescued from a near miss in the over-designed bathroom of a Barcelona bar, pulled back from the brink after confusing a hand basin with a urinal.

We might think of design as a marriage of form and function. Yet the ratios often shift to produce the absurdity of, say, a Philippe Starck lemon squeezer - great styling, but the juice goes everywhere.

Design has a job to do, and now more than ever. We are learning to integrate it into our lives with a greater sophistication and understanding. And the more the consumer responds to the product, the better designed it becomes.

There is no shortage of design awards to recognise the success of specific products, such as those longestablished by the Design Council. Now a new prize, the £25,000 Designer of the Year award, aims to puts faces to the functionality, honouring the designer rather than their creation, and drawing our attention to just how pervasive and broad a discipline it has become.

Launched by the Design Museum - the institution that has done most to raise our expectations of what design can do - the prize's judges include fashion guru Sir Paul Smith and Marc Newson, the designer of some of the most memorable objects of the past decade, such as the Orgone Lounge chair and Ford's 021C concept car.

"Design has reached cultural and popular maturity," says Alice Rawsthorn, director of the museum and chair of the jury, who admits a "shameless ambition" to replicate the success of the Turner Prize. "It's done a brilliant job of raising the quality of the debate - it's time for an award for design which has the same stature."

The short list sets out the scope of what might constitute design, and how we use it. Solange Azagury-Partridge is a jewellery designer whose self-taught individualism is now rethinking the grand Parisian house of Boucheron. Tord Boontje has made a reputation for lighting fixtures that range from sculptural crystal confections for Swarovski and Dartington to low-cost plastic "flower arrangements" that you style for yourself around a light bulb.

Jonathan Ive is the designer behind the revitalised look of Apple computers since the launch of the first colourful iMac in 1998. And Rockstar Games developed the Grand Theft Auto series for PlayStation 2, which has broken records for sales of video games and redefined the level of detail and imagination in the field.

When enthusing over the latest game in the series, Vice City, Time Magazine suggested it bordered on art. That's a huge claim, and one that rarely sits comfortably within fineart conventions.

Art critics don't often contemplate design. The practice is somehow seen as secondary to the lofty aspirations of art, as it's always answerable to a specific commission. One of the most subversive gestures in a gallery I've witnessed for years was artist Liam Gillick's vitrine of his recent designs, placed in the centre of his Turner Prize room last year.

The few critics who deigned to mention these contributions to his installation were dismissive of their "minor" status, and they hardly merited the profound chin-scratching inspection of a "real" work of art. But Gillick's refusal to distinguish between art simple and applied art is a reflection of the blurring of boundaries between the disciplines.

The irony here, to take Boontje's exquisite interplay of crystal and light, or Azagury-Partridge's playful pleasure with precious materials, for example, is that it's design that offers us the most sensual, hands-on aesthetic pleasures, while art beats a retreat into the realm of ideas.

Design is not about embellishment: sometimes the best design is invisible, being so much part of the nature of the product. You don't need to see how an object works, it just has to feel right when you use it. I feel this way about the Ive-designed iBook on which I'm writing these words.

I only notice how good the machine is when I'm stranded at someone else's computer, where the design feels as if it's been tacked on at the end of the production process. I don't need to analyse why I feel at home with my iBook; it is part of my life.

But design isn't just about producing useful objects: it should enrich, enable and encourage imagination in work and play. The inclusion of video game designers in the short list shows that the best design can instil a passionate engagement, even through a virtual experience. Rawsthorn suggests that video games can generate "the same emotional intensity for teenagers as movies or albums might have in the previous generation". It's as if we invest a personal stake in the design that excites us.

The accessibility of design "allows intelligent judgments to be made very quickly", according to Rawsthorn. We're more articulate about how design works for us. Perhaps this accounts for the Design Museum's admirable decision to enable visitors to the museum and its website to cast their vote for the winner.

The popular vote will stand as the "sixth voice" when the five jurors come to make their decision. (It's always been one of the Turner's mysteries, incidentally, just what happens to the votes solicited from the public during the judging process.)

When I cast my punter's vote for Designer of the Year it will have to be for Jonathan Ive. The Chingford-born 36-year-old graduated from Newcastle Polytechnic in 1989 and set up a London-based design consultancy, Tangerine, a couple of years later.

He's been involved with Apple since 1992, and now heads its industrial design team in California. I once feared that Apple would go out of business and I would have to migrate to something called "Windows". Business analysts argue that his design alone may have kept Apple afloat.

The company sold a staggering two million iMacs in its first year. And I'm also addicted to his iPod MP3 player. Every morning when I clasp that little block of snow-white plastic and polished steel that belts out my favourite pop tunes, I can almost bear the extended, circuitous, navigation around London minus the Central line. The Designer of the Year show is at the Design Museum (020 7940 8790) from 1 March to 29 June. The winner will be announced on 22 June.