Today, a co-worker and I, both fans of the iPhone, were discussing how to do text selection and cut/paste operations. I'll confess that I didn't have much of anything to add to the conversation beyond being a good listener and carefully considering his ideas.
He had a pretty decent notion of using one finger as an anchor position while the other could drag around to set the other anchor. With our hands, you could cover the screen completely and even handle scrolling through longer documents. We weren't really sure how to implement the cut/copy/paste side of the equation, but we guessed that an alert panel with applicable buttons would suffice.
After seeing David Friedman's tweet about his take on the subject, I knew that he had nailed it perfectly. His solution is captivating in its simplicity and obviousness. If any Apple iPhone engineers are reading this and haven't read his entry, get out of here right now. Also, hey, good job on the iPhone—can you pull some strings and get me in the beta program?
The iPhone as trackpad is just genius, sheer amazing genius.