We knew this update was coming, but did not know all it encompassed.  The list is longer than thought, but should help refine the iPhone experience.  There are a few notable updates such as non-destructive video edits and voice control via bluetooth headset.  See all the updates after the jump.

- Improved syncing for music, movies, TV shows, podcasts, and photos
- iTunes U content organization
- Redeem iTunes Gift Cards, codes, and certificates in the App Store
- Display available iTunes account credits in the App Store and iTunes Store
- Save video from Mail and MMS into Camera Roll
- Option to "Save as new clip" when trimming a video on iPhone 3GS
- Better iPhone 3G Wi-Fi performance when Bluetooth is turned on
- Remotely lock iPhone with a passcode via MobileMe
- Use Voice Control on iPhone 3GS with Bluetooth headsets
- Paste phone numbers into the keypad
- Option to use Home button to turn on accessibility features on iPhone 3GS
- Warn when visiting fraudulent websites in Safari (anti-phishing)
- Improved Exchange calendar syncing and invitation handling
- Fixes issue that cause some app icons to display incorrectly

You can now download the update via iTunes once you connect your iPhone or iPod Touch.