Minecraft 1.1 Released
Bows can now be enchanted. There are 4 different enchantments for the bow: Power, Punch, Flame, and Infinity. Power makes your arrows inflict more damage, punch increases the knockback effect on mobs, flame sets your arrows and whatever they hit on fire, and infinity makes it so that you have an infinite number of arrows as long as you have one arrow in your inventory.
There are 56 new language translations. You can now play Minecraft in Spanish, German, etc. There is also a fictional language which has been added, Pirate.
Sheep will now eat grass to regain their wool.
The collision box on fence gates has been fixed to match that of fences.
Magma cubes will now drop magma cream when killed.
There is now a smooth transition between swamp lands and water colors to other biomes.
There is a new world type option. You can play on default or superflat. In superflat, as you may have guessed, the world is completely flat.
And the thing that I am most excited about is that they have added spawn eggs to creative mode. Now, in creative mode, you can take any egg from your inventory, right-click it, and now you have your very own mob. You can spawn passive mobs, hostile mobs, and also mobs that exist only in the Nether.
For a complete list of all the additions/changes/fixes you can check out the Minecraft Wiki here.