Student developer Zac White founded a non-profit, open source, community project called OpenClip which is offering iPhone developers a free Copy and Paste framework that will add this functionality to their applications. This will allow users to copy and paste data between supported applications.
» FrameWork OpenClip (copy & paste between applications on the iPhone)

According to a new article. Apple is working on copy&paste in firmware 2.1. Some developers got the firmware 2.1 beta in their hands and found a reference in the Localizable.Strings for copying, cutting and pasting. The features are currently not implemented but are in high demand of most iPhone and iPod Touch users. Apple previously informed us that copy & paste was a feature that had low priority.
» Apple working on copy & paste in fm 2.1?