A new version of Kobo iOS app just showed up in iTunes this morning. The new version has one major new feature add: notes and highlights. It's not quite ready for download, though. They've updated the page in iTunes, but I can't download it. I'll try back later.
It's a pity they couldn't have gotten these features into the Literati; that would have done a lot to salvage the review.
BTW, I noticed something rather odd. You might recall that I wrote a post on Monday complaining about Kobo formatting. Well, I just opened those same ebooks on my iPod Touch and they have all the nice little extras found in the Kindle edition. Now I'm really confused. Why do Kobo's reading apps all have vastly different abilities? It makes no sense.