It appears that Microsoft statrted pushing update to Windows Phone 7 to some developer devices. In this case, the device to receive the update was the Samsung Taylor, which increases the version number of the OS to 7.0.7338.0. Retail devices are currently running 7.0.7004.0.
A tipster claims that the Samsung Taylor got the update after being connected to the Zune software. The tipster also walked us through on just how copy and paste for the Windows Phone 7 platform works:
A user can tap a word in mail, IE, Word, etc and that word is then highlighted with arrows on both sides. One can then drag to the left or right to include more words. An icon appears above the highlighted word(s) (looks very similar to the copy icon in Office 2010) to copy. Open a new document, once the cursor is set/blinking and the soft keyboard appears, a paste icon (again, looks the same as the paste icon in Office 2010) is shown just above the top row of letters. In "Messaging", a user can long press a specific IM which open up the hidden menu that now includes copy. Paste where you wish.