According to the listing at the Apps Store here are the changes to version 1.3:
An option to display the Status bar in full-screen mode. Bookmarks. Adding and editing notes. Highlighting text. Sorting the on-line bookshelf by Title, Author, or Purchase Date. Type-ahead, exact match handling and other Reference book improvements. Performance enhancements in page flipping. More choices for downloading books including a direct connection to the the eReader Mobile Site. Fixed several pagination issues. Fixed handling of user passwords that contain special characters. Non-ASCII characters are now handled correctly in unlock information. Download buttons are no longer red. Images no longer looked-up in reference books. Several minor bug fixes.

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