There are two significant improvements in the iPhone 1.1.3 software/firmware update that slipped under the radar. First, the limit for text message storage has been increased from 1,000 to "about 75,000" according to Apple.
Second, the virtual keyboard now allows two-finger touch typing. In other words, you don't need to remove your finger from one letter in order to type another letter. This new capability makes it possible to use the shift key like you would on a normal keyboard -- simply hold the shift key and type a letter to capitalize it, then release the shift key and the next letter you type will be lower-case.