Kevin Rose from Digg says that the iPhone is finally going to catch up with modern technology and gain the much desired cut, copy, and paste features.
The new feature will work by double tapping then using two fingers to select the text you want, much like the magnifying glass.
The other big news is that the iPhone 3.0 will be brought up to speed with the Palm Pre, so the Pre will now have nothing over the iPhone. Kevin also says that the new iPhone will not have support for background apps or taking video.
As the new OS is supposed to be released tomorrow, we should know a little bit more for sure soon.