I have been playing around with my upgraded original iPhone since last Thursday and after recently syncing my iPhone I saw that there were a few screen captures showing up in iPhoto. I was a bit confused about how they got there and rechecked my iPhone to see if I had downloaded an application that took screenshots. However, there was nothing there on my iPhone. After a bit more research, I read in the ZDNet iPhone 3G review that Apple added this functionality right into the 2.0 software update.
When you are on a screen that you want to capture, you simply press and hold the Home button and then press the the power/sleep button. Your screenshot will then appear in your photo gallery on your iPhone where you can send it or sync it as you desire. I plan to use this functionality when writing software reviews and am pleased it was included in the update. I now need to test it out while playing games and using applications where pressing in on the Home button may affect the program.