We study the formation and evolution of coherent islands on lattice mismatched epitaxially strained films. Faceted islands form in films with aniostropic surface tension. Under annealing, these islands ripen until a stable array is formed, with an island density which increases with film thickness. Under deposition, an island shape transition occurs, which leads to a bimodal island size distribution. In films with isotropic surface tension we observe continual ripening of islands above a certain film thickness. A stable wavy morphology is found in thinner films.