Apple (finally) introduced cut copy and paste in the iPhone OS 3.0 and they also implemented a nice feature: shake to undo. The only thing is that you can also “shake to read passwords” . All you need to do is to delete a digit and then shake to undo and you will be able to read the letter or number. It works with all the digits in a password except the first one.
Apple fixed this bug in iPhone firmware 3.1, but we advise you not to update yet, and wait for iPhone DevTeam’s software before upgrading.