There are been many efforts to bring copy/paste to the iPhone. First was iCopy to copy and paste within Safari and then Zag White (Creator of MagicPad) came up with OpenClip which could allow Copy/Paste between all applications using the OpenClip framework. And now, we have Pastebud. It allows Copy/Paste within Safari and Mail application.
To setup Pastebud on your iPhone, visit Pastebud.com from the iPhone or from your computer if you want to set it up easily and then Sync your iPhone.
Lets hope, Apple realises that users need copy/paste!! and they soon realize that the iPhone should have native Copy/Paste.