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Update 2.0

It is a pretty major update that comes with lots of new features and the ability to add appliations to the phone with iTunes, therefore they are naming it 2.0 to distinguish it from the 1.X.X series which can't.
 
Isn't it a software upgrade and not a firmware?

I was thinking the software would be called 2.0 and the iPhone could then be marketing as 'NEW iPhone 2.0' but the firmware may only jump to 1.1.5.

Forgive me if my arse is typing for me again but thats how I understood it? I thought they were two separate things.
 
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