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Being iPhone-less (I know, my life must be awful beyond comprehension) I can’t speak directly about the iPhone update, but TUAW’s Erica Sadun has everything you could possibly want to know about it.
Looks as if Safari is the main target of this update.
If you’re a dirty modder (sarcasm people!) it looks like you’ll have to rehack the thing
If you’ve run the update, we’d love to hear your take on the results!