It happened. Apple just unveiled the copy and paste functionality for the iPhone in the iPhone 3.0 OS preview event.
It is of course the best ever implementation of copy and paste on a touchscreen user interface in the world. Why else would it have taken that long to develop?

Fun aside, the feature looks pretty neat. You select with your finger and some buttons (copy, cut, paste) appear to let you choose what to do with the selection.
A double tap selects a whole block. Pasting works of course across applications. What more do we want? Now the iPhone ridicule will have an end with the release of the iPhone 3.0 firmware. Can't wait.
More details on Engadget. Update: The first question during Q&A was about the Copy and Paste function. Apple says navigating security and nailing a simple UI have been the reasons why it took so long to bring Copy and Paste to the iPhone. Via Ars Technica.