The iOS 4.2 software update is now available to installed on your iPhone, iPad, and iPod Touch compatible devices.

Some of the big features of the update are:
AirPrint: Allows the wireless printing of emails, photos, web pages, and documents. Also no drivers are required. (Note: only supports compatible printers on a local wireless network)
AirPlay: Lets you stream digital media (such as: music, videos and photos) wirelessly from your device to an Apple TV or AirPlay-compatible speakers.
Find My iPhone: The MobileMe feature that can help you locate your missing device and protect its data is now free (if you have a forth generation iPhone or iPod Touch).
FaceTime improvements: Initiate calls with Voice Control or from an SMS conversation, and support for Bluetooth accessories.

Other enhancements include:
Safari allows finding text on a web page.
Notes has a new fonts setting.
SMS/MMS text tones can be assigned to individual contacts.
Some additional parental controls restrictions.
Calendar can import .ICS files.