According to Gizmodo a new solution called Pastebud will bring limited copy/past functionality to the iPhone. This solution doesn't require you to jailbreak your iPhone or install any applications and just uses two Safari bookmarks to work. This is limited to only copying text from Safari and pasting it into Mail or another web page. There is no copying and pasting into Notes or anywhere else on the device.
While this may bring the functionality many are looking for, there is a lot more Apple could do to support this natively with an update. I asked the question about needing copy and paste in August and since that time I have to admit I only used copy and paste on my G1, Treo Pro, HTC Fuze, and other devices once or twice. However, the iPhone is basically a mobile computer and really should have this basic functionality that some people do need.