iBooks 1.2 (iTunes link) is a free update available on the App Store. The 15.2MB file requires iOS 3.2 or later.
New features in version 1.2, according to Apple, include:
Experience fully illustrated books, from children's picture books to beautifully designed art books, available for download in the iBookstore.
Organize your books and PDFs into personal Collections. Swipe left or right to jump between Collections.
Print PDF documents and notes you've written in iBooks using AirPrint.
iBooks now fits more words per page by automatically hyphenating text, available only on iOS 4.2 or later.
iBooks was last updated in June, when Apple added PDF support for the e-reading software. It also added new ways to bookmark, and gave more font selections.