As was previously pointed out here at TUAW, the 2.0 firmware update for current iPhone
In the interest of doing something so readers of TUAW won't have to take the chance of a bricked iPhone, I downloaded and installed the new firmware this morning as soon as it was available. The update process went smoothly and, as expected, all of the media was erased from my iPhone. Fortunately, once the iPhone restarted and began its first sync after the update, all of my previous media (music, podcasts, video) was restored and able to be used again.
At first glance, some of the changes included in the new iPhone interface in iTunes 7.7 include an 'Applications' tab and a button to set up your iPhone to work with Apple's new MobileMe service which, as of this moment, isn't actually up and running yet. Also, after downloading several apps from the new App Store including AIM, Facebook, Google and Twitterific Premium, the iPhone was able to use those new applications without issue.
I also downloaded and installed other applications such as Salesforce Mobile, Net News Wire and Remote but so far, have not tested those. Also, and this particular change in the iPhone 2.0 interface made me very happy, there is now a dedicated 'Contacts' button allowing you to reach your contacts without having to go through the 'Phone' button first.
So, it appears that, at least in my case, the iPhone 2.0 firmware is a success. As the day progresses I'll let you know what else I find. Meantime, if you have questions, feel free to drop them in the comments.
Update: As pointed out by commenters, this update is for the iPhone only. The iPod touch update will be a paid download from the iTunes store for $9.95 and will include the January Update apps, as Robert noted earlier today.