Steve Ballmer after finishing on stage of the Windows Phone 7 launch, demonstrated the upcoming copy and paste features to CNET that'll come early next year to WinP7.
"Copy and paste will work by letting users click on a particular word and then expand or contract their text selection from there. A separate paste icon will appear allowing users to paste text, though the look is not yet final."
It seemed to work well, if not quite as elegantly as what Apple has done on the iPhone. The good news is that it's indeed coming sooner rather than later. Although Microsoft is pitching its phones as the devices for the common user, copy and paste is important because it's one of those "check box" features that users look for, even if they never make use of it.