Apple just announced that iPhone OS 3.0 will support copy and paste and MMS. A double-tap auto-selects the text you want. Interestingly there is a feature called "shake to undo," which is exactly what it sounds like.

Other features added include MMS, landscape keyboard, new Spotlight that searches the entire device, 3G tethering, Stereo Bluetooth A2DP audio, Shake to Shuffle music, and more.