The iPhone OS 3.0, which Apple is previewing this week, will include a new copy-and-paste feature, according to Digg.com founder Kevin Rose, who spilled the beans at the South By Southwest 2009 conference in Austin, Texas. While such rumors can be taken with a grain of salt, Apple’s new iPhone operating system has drawn a lot of speculation over the past few weeks.

Apple iPhone OS 3.0 will include a copy-and-paste feature, according to Digg.com founder Kevin Rose during a Q&A session at the South By Southwest 2009 conference in Austin, Texas.

Rose, who apparently got the information from a "friend who was right before," said that copy-and-paste will be revealed as part of the iPhone OS 3.0 release on March 17, and explained how it functioned. But Rose didn’t say who the friend was, or how they came across the information.    

"The way it works is that you double-click on the word, like you double-tap on the word, and it brings up kind of like the magnifying glass a little bit?" Rose told the audience. "And it has two quotes on the end, and you drag the quotes around the copy that you want to copy and paste – and you go out or back, and you can do copy, paste or cut."

Video of Rose speaking can be found here.

Apple remains silent about any specific updates to iPhone OS 3.0. A recent Gartner report has Apple’s share of the smartphone operating system market growing 111 percent between the fourth quarter of 2007 and the fourth quarter of 2008. Rumor has it that Apple will also use the March 17 event to detail an updated version of the software development kit – SDK – for the iPhone.

Whether or not the copy-and-paste rumor pans out, the iPhone OS 3.0 has nonetheless excited intense speculation. Apple also faces potential competition in a few months with the rollout of the Palm Pre, which was designed with the help of Jon Rubinstein, most famous for his role in the development of the iMac and iPod before leaving Apple in 2006.   

The Pre, which will include both a 3.1-inch multitouch screen and a real keyboard, has been touted as an iPhone killer by Palm investor Roger McNamee; Pre subsequently backed away from his statement in an SEC filing.