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Upgrading is a cinch, that is, unless you are have a jailbroken iPod touch or iPhone. When I upgraded, I lost all of my Jailbroken apps, themes, plugins, etc. What was worse was that many of the apps I re-installed did not work!
Copy-Paste was pretty much the most anticipated feature in OS 3.0. But, as a jailbreak user, this is nothing new to me. As for other users, this is very useful. It is very easy to use, and works throughout the phone. Here is a screenshot of it in action.
Spotlight is also a useful new feature. There are apps to search your iPhone in Cydia, but none as quick or easy to use as spotlight. I generally use it to quickly launch my songs, apps, etc. It even searches your Safari history! Here are a few screenies of spotlight.
The landscape keyboard really makes use of the iPhone's large screen. It really adds to the ease of use of the iPhone OS. This was also a highly anticipated feature of 3.0. Here are some pics.