At a live diggnation show at SXSW, Kevin Rose claimed that the new iPhone 3.0 software update will include support for copy and paste.

With Apple’s scheduled presentation on the iPhone 3.0 software update just 2 days away, the rumors about what the update will have are piling up. One of the more interesting, and perhaps credible, rumors comes from Digg co-founder Kevin Rose who recently said at a live Diggnation taping that the new iPhone 3.0 software will support Copy and Paste. (Insert applause here).

And how will Copy and Paste work? According to Rose,

You double click on a word.. you double tap on a word, and it brings up the magnifying glass, and it has 2 quotes on the end, and you drag the quotes around the [section] that you want to copy..

Seems simple enough. One issue that comes to mind, though, is how the phone will differentiate between double taps intended to initiate a cut or paste, and those intended to zoom in on a webpage?

Rose also mentioned that there won’t be any support for running apps in the background. But one of the more interesting tidbits from Rose’s source was that “everything that the Palm Pre software had on Apple has now gone away.” Interesante mi amigos. The Palm Pre looks really slick, and it’ll be interesting to see which features from the Palm Pre Apple has chosen to include in the latest iPhone software update.

Rose’s track record regarding Apple rumors has generally been hit or miss, so take the above report with a grain of salt. I, however, am inclined to believe it. The Palm Pre has been getting lots of good press lately, and many are touting it as a worthy competitor to the iPhone, in part because it has features that the iPhone currently lacks, namely cut and paste and the ability to multitask. Apple has repeatedly stated that it views the iPhone as a software platform, and as such, significant upgrades to the iPhone OS are inevitable. Apple wouldn’t have a big iPhone media event unless it had big news to deliver, and cut and paste definitely fits the bill. The only other question is what other tricks Apple might have up its sleeve. Earlier this week, Boy Genius Report said that support for MMS messaging and tethering will also be included in the new iPhone OS.

Anyways, check out this video clip from Diggnation and see for yourself.