Kevin Rose, yeah the Digg fella, is well known for breaking Apple rumors.
He continues the trend with his words at SXSWi.
He stated that the iPhone 3.0 update will indeed have copy and paste.
Mr Rose says that you use two fingers to select the text you want, and then you can cut or copy.
That’s all very cool but apparently Kev says that 3.0 won’t have support for background apps – this kinda poo-poo’s his claim that that 3.0 will bring the iPhone
“up to speed with the Palm Pre”.
Guess we’ll find out what’s on March 17th.
Check out the vid below of the wise Mr Rose 
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