UPDATED AGAIN: Pastebud founder, Jed Schmidt, via the comments, directs us back to Technologizer (see link below) for his update on what was happening:

I’ve updated this issue over at Get Satisfaction[1], but let me just summarize what exactly was going wrong: you were inadvertently forwarding your emails not to your secret pastebud address, but to the address set as the from address for these emails, which was noreply@pastebud.com.

This happened to other folks too; instead of sending email to secret-random-string@pastebud.com, they were sending to noreply@pastebud.com. And everyone who was doing this ended up sharing the same clipboard.

Anyway, I just wanted to let you know that we’ve fixed it, and the changed will be live by the morning.

PREVIOUS UPDATE/PRIVACY WARNING: Technologizer is showing that they're getting other people's clipboard data in their paste results, including complete emails:

Pastebud’s site addresses security, and says it’s “safe enough” for general use. Based on my experience so far, I think not! But I don’t know if I’m running into some bizarre quirk or doing something wrong, or if this is happening to everyone who’s trying Pastebud as I speak. I just know that I’ve come to the conclusion that using a Web service as a substitute for a feature that should be in a device’s OS may not be such a great idea after all.

This might be a temporary glitch on the server side, but it's a very disturbing glitch and one that might just be a deal-breaker for the security and privacy concerned.

Original post after the break...

We mentioned Pastebud yesterday, the bookmarklet based cut/copy paste "solution" that's trying to plug one of the longest and most glaring omission in the iPhone feature set. Well, Gizmodo and fellow Gawker-site Lifehacker has given it the hands on look see, and what did they find? Giz says:

Pasting text back into another web form via the PASTE bookmarklet is easy—after tapping it, a green box labeled PASTE HERE is overlaid onto any open form field. Tapping that drops in your clipboard's contents, preserving any HTML that was there if the form supports it. But, of course, there are some drawbacks. While pasting to and from different Safari windows and emails covers a lot of one's copying and pasting needs, it's not anywhere close to the convenience a system-wide solution would bring.

Lifehacker weighs in with:

One small issue, though, at least for those who don't pay $5 to Pastebud—it inserts a little "Pasted from my iPhone!" and promotion link in every paste. You can delete it, of course, but it's there every time... And once your text arrives, you get a little pop-up box, asking you to upgrade for $5 to "make it even more convenient"

Need more incentive to cough up the $5? LH says SSL, destroy-on-paste, and other security concerns will be soon addressed in the paid version.

Enough for now? Still not good enough? Waiting on a built-in solution from Apple? Or forget Apple, gimme whatcha got?

The previous attempt to make an end run around the iPhone's lack of cut/copy and paste involved shared code called OpenClip and relied on a loophole Apple closed in iPhone OS 2.1

This latest tilt at the text editing windmill targets only 2 apps instead:

Pastebud—as the service is called—works using two bookmarks in Safari. One prepares and loads the page you are viewing, ready to select text at the touch of a finger. From there, you can copy any text you want and create a new mail message with that text in it. In addition to that, you will be able to copy and paste in the text field of a different web page.

Check out the full story and video over at Gizmodo. And then let us know if you think this is enough -- for now -- to satisfy your cut/copy and paste cravings?