Among the 16 iPhone updates that greeted me this morning was version 1.3.1 of the free Dropbox app, which adds improved photo support and a number of bug fixes.
A quick jog through the release notes shows that iOS 4.2 compatibility was a major contributor to the update, particularly since it is expected that the new OS will arrive shortly.
Photos are now handled differently than they have been in earlier versions. There is persistent photo caching, which means that standard image file formats (not PDFs) are cached on the device for quick viewing of photos even after leaving the app and returning. Previously, PNG and GIF images were JPEG compressed when they were viewed on the device -- the update turns off the compression for better image quality. On devices with Retina displays, thumbnails of images are now much higher quality.
One of the features listed is "improved scroll bar behavior and appearance in document viewer," although I really couldn't see any difference over earlier releases. The bug fixes include proper handling of .PPSX, .XLSM, and similar less-popular Office file types, stability improvements, and media player performances fixes, among others.