As I feared, Apple has not taken kindly to the ability of a third-party developer to find a way to both avoid breaking the rules and providing what 90% of iPhone users have asked for. The developer of a copy & paste method for the iPhone has seen a beta version of iPhone 2.1 software and found that Apple has crippled his method, at least partially. One will still be able to copy & paste within an app but not between them.
Apparently, the native method of doing a copy & paste (NSPasteboard) is already provided by Apple, but it cannot yet be used in the iPhone. Possibly in an attempt to keep security as tight as possible. Apple allows apps to read other apps files but not to paste that info in their own. So the developer, Zac White, created his own API (OCPasteboard). Now, Zac feels Apple is about to block his method, in a future upgrade.
This is not an unknown philosophy at Apple. They often warn developers who make use of certain features and software entry points that they (Apple) can, and sometimes does, change or even delete those features.
The whole hardware/software/user playing field is quite different with the iPhone, the App Store and "the rest of us." Apple rules the whole process with a fairly heavy hand, IMHO. First, Apple determines what, if any, app gets placed on the App Store. That does have advantages as far as quality and security go. However, once an app has been made available, there is usually a multi-day/week delay for upgrades to be offered because Apple must start the whole process over again. Seems to me that there should be two different sections of researchers/investigators/or whatever they call themselves to look at possible apps and apps that are already approved but have updates. That would help both users and the developers. Delaying fixes is no way to keep either group happy.