Microsoft has released Windows Phone Developer Tools January 2011 Update. This update contains implementation of copy-paste operation, fixes in pivot and panorama controls, performance improvements etc. You can download it and read a full description of the update here.
Copy-Paste
One of the most expected feature is copy-paste. To start using it you need just update your phone’s firmware. The firmware is not available yet and it is expecting to be released in a few days.
If you are a developer, you can test this feature on your emulator. Just install Windows Phone Developer Tools Update, Visual Studio Windows Phone Developer Tools Fix and run any existing WP7 application that contains a TextBox control.
If you click text in the text box, it will become selected and an copy icon will appear. Also, a grey bar above a keyboard will appear
This bar contains icon(s) that allows past copied text. After pasting, this icon hides on the left and I have been confused – whether they do not allow pasting the same text several times?
No, they allow. If you pan from left to right by the grey bar, the icon appears and you can continue pasting copied text.
Also, you can go to another application (e.g. Bing Search) and paste text there.
I noted that Visual studio did not stop debugging if you went to the home screen of the emulator or opened another application. You could return back to you application and continue debugging – awesome! In the previous version of the emulator it stopped.
Update 1
Copy text from web pages works as well. 
Also, copying web links as also available. Just press a link and wait for a second and in the popup menu you will see the copy link item.
Conclusion
I am looking forward for the update of the firmware to test copy-paste feature on a device. Also, I have a couple of open questions to MS developers – do you plan to support multiple clipboard buffers (now it supports only one)? Why do we need so long bar for displaying just one icon? Does it a user-friendly behaviour if the icon hides right after pasting?
Anyway, it is the first update and we are waiting for next ones with more features, improvements and capabilities. Thanks!