First off this awesome video put together by
- Added pistons.
- Fire or redstone is now required to triggerTNT.
- Fences can be stacked.
- Added Shears.
- Shears can be used to pick up leaf blocks.
- Shears can be used to shear sheep without hurting them.
- Sheep no longer drop wool from being punched.
- New textures for Cobblestone and Brickblocks.
- Silverfish was added (possibly for Beta 1.8).
- Pressing F3 ingame, near your coordinates is written the direction you are looking with 0,1, 2 and 3.
- The gray textures in the breaking animation have been replaced with opacity.
- Spawn rate of Squids increased. (?)
- Single slabs now use the bottom half of the full block's texture
Im sure this will be enough to keep people going till the next update :D