I’m really excited, WordPress 2.8 is finally out with some really nice new features (see list below). To upgrade your blog you have two options. You can go into your dashboard to Tools => Upgrade. Of course you can always do it manually by downloading the zip file. Before upgrading make sure you a have a full backup of your files and database (I like using the WP PD Backup Plugin).
Main New Features In WordPress 2.8
- New drag-and-drop widgets admin interface for a better widget management
- Browse the theme directory and install themes right from the admin dashboard
- Improve the theme and plugin editors with CodePress syntax highlighting and function lookup
- Quickly activate, preview or delete your theme
- Allow case-insensitive logins
- You can customize dashboard widgets with easy drag and drop. You can arrange widgets in up to four columns
- Support IIS 7.0 URL Rewrite Module to change URL structure when WordPress runs on IIS 7
- Manage your Tags better just like the categories section. You can add or edit the Tag name, Tag Slug and descrription
- No more notification when the post author left a comments
- No more asking for a confirmation when marking a comment as spam
- Now you can edit all your plugin files within your admin dashboard
- Support timezones and automatic daylight savings time adjustment
- Faster loading of admin pages via script compression and concatenation
- You can read the full list on the WordPress Codex page.