Update includes:

* Decrease in call set-up failures and dropped calls
* Significantly better battery life for most users
* Dramatically reduced time to backup to iTunes
* Improved email reliability, notably fetching email from POP and Exchange accounts
* Faster installation of 3rd party applications
* Fixed bugs causing hangs and crashes for users with lots of third party applications
* Improved performance in text messaging
* Faster loading and searching of contacts
* Improved accuracy of the 3G signal strength display
* Repeat alert up to two additional times for incoming text messages
* Option to wipe data after ten failed passcode attempts
* Genius playlist creation

Good to see the Genius Playlist feature is there, and it's a nice surprise to see the incoming SMS extra alerts: I've certainly missed a few texts arriving on my iPhone. The app install speed boost and crash fixes also sound like good news for developers and users alike... but we'll have to wait and see how successfully 2.1 addresses dropped call problems, and back-up timing. "Significantly better" battery life sounds like a winner, if it works as advertised.

Note that to get iPhone 2.1 up and running you'll have to download and install iTunes 8, which you can do here.
[Apple]

Update: The "3G signal strength display" fix certainly seems to have done something for my iPhone 3G: it's sitting here in the same place on my desk, and has gone from two bars of 3G signal with the 2.0.2 software to a whopping five bars in version 2.1.

We were hoping for it, and it looks as though will actually get the iPhone 2.1 update on Friday. Word is that the free update will "fix a lot of bugs." Expect less call drops, crashes, better battery life, and a faster sync (thank God). Still no copy and paste though. Bumnmer. UPDATE: Current iPod touch owners will have to spend $10 to get the 2.1 software via iTunes—unless you purchased 2.0. For those users it is a free update. It is also included free with the purchase of a new unit.