1.2.4 Update: What it does

New Features:

Chat history and much better chat editing
You can click on links in chat
Scroll up/down for history
Up/down keys for recently sent messages
Tab complete for player names
Copy & paste in chat
Just like type §k in chat displays random characters, §l §m §n and §o creates bold, striked, underlined and italic text respectively. Whilst §r resets any set states. These can not be typed using vanilla clients.
A few new decoration blocks
Wooden planks now have the color of the type of wood they came from instead of the original wooden plank texture.
New Sandstone Blocks
o Backo and o Quito buttons to OutOfMemoryScreen
Cats will now sit on chests and beds, purposely preventing players from using them.
Added a o minimalo debug menu for testing with. It can be accessed with Shift+F3 and is the same as the regular F3 menu, except without the graphs.
Return of armor outlines to the default inventory.

Bug Fixes:

Made placing half blocks on existing half blocks (to make a full block) easier
Limit framerate on menu screens, no longer uses 100% cpu and making computers melt
Fixed fatal crash for converted worlds to anvil, when thereo s blocks at max height
Fixed an old bug with signs clearing text while youo re editing them in SMP
Fixed crash when logging in while there are blocks at maxheight at spawn
Fixed TNT ghosts in multiplayer
Fixed storage minecarts dropping enchanted items
Fixed crashes on invalid server addresses when joining a server
Fixed entities being uninteractable if they existed at login (Multiplayer)
Fixed dupe exploit with paintings
Fixed furnaces and dispensers dropping enchanted items
Fixed the o flickeringo of chat as it vanishes off the screen
Fixed text rendering over items in the container screens
Fixed exploit with jungle saplings (turns other saplings into jungle ones)
Fixed launcher opening minecraft dir if the path contains a space
Fixed an off-by-one lighting bug
Fixed block transmuting (turning one block into another via pistons)
Fixed placing mushrooms in daylight, where they cano t survive
Fixed redstone lamps dropping powered block items when destroyed while on
o save-allo (server command) now works even when you have toggled o save-offo
Fixed turning half-blocks into full-blocks while youo re standing on them
Fixed seed displaying in F3 debug when the seed is unknown (multiplayer)
Fixed villager texture changing clientside per profession
Fixed falling off ledge corners while holding shift
Fixed players falling when reconnecting to servers where they were previously flying
Glass can again be picked up using Silk Touch enchanted tools

New Bugs:

When you type a full bar of chat, then backspace, you crash your client.
COMMAND-key chat shortcuts don't work on Macs.
The buttons in the "do you want to click this link" screen are positioned incorrectly.