Donut is the development branch of Android that contains the latest and greatest features that are up for inclusion into the next version of the mobile operating system. Developers saw some interesting stuff get checked into this branch, including official multi-touch support.
Just because it's part of this branch, however, does not mean it will be available in the next mobile device. It's still interesting to see what Google has been working on, regardless if it makes it into the official release.
The new version of the operating system includes interesting features including:
- CDMA support for networks like Sprint
- Some "Toggle" widgets so you don't have to dig around in your settings to turn off bluetooth or wifi
- Universal search -- similar to Spotlight for iPhone
- Automated backups (with GDrive perhaps?)
- Performance enhancements
Mobile Crunch has some screenshots from the simulator included in the SDK.