The update adds quite a few performance enhancements but most notably the support for Apple's new iPhone 4 and allows syncing books to iPhones and iPods with the yet to come iBooks application.
Some of the new features are:
Sync with iPhone 4 to enjoy your favorite music, movies, TV shows, book and more on-the-go
Sync and read books with iPhone or iPod touch with iOS 4 and iBooks 1.1
Organize and sync PDF documents as books. Read PDFs with iBooks 1.1 on iPad and any iPhone or iPod touch with iOS 4.0
Organize your apps on your iOS 4 home screens into folders using iTunes
Faster back-ups while syncing an iPhone or iPod touch with iOS 4
Performance improvements make scrolling much faster
If you plan on being an early adopter of Apples iPhone 4 or upgrading your current device to iOS 4, don't forget to update to iTunes 9.2.
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