I've been manually keeping iTunes & MC in sync - yes it's a pain - I will need to use a tool at some point. I checked with Rob from ITSync and he said he tests it with all new versions of iTunes and it is compatible with iTunes 8. While I've not yet tried the latest version, I found Rob to be very good and responsive on support in the past. If you drop him an email, he can help you get it working.
Thanks. Now that I have iTLU working, I'll probably just stick with that (since it is free and fast) until something else comes along that causes issues.
I'm definitely seeing the battery life improvements as well. This update has just been superb. Really, really what the phone should have been all along. The only bummer I've found so far is the contacts custom label thing.
I read that some of the battery life improvements are that it turns off the EDGE/3G data chip and associated electronics when it is actively connected to WiFi (rather than just sitting there idle, but turned on). This seems like a "duh, of course" type improvement, but it would certainly make sense that it could help dramatically with power if you are connected to WiFi for much of the day (I am). That is certainly not the only thing they've done though, because I'm seeing better life all-around, even when not connected to WiFi.
One little tip... Apparently there was a bug in the initial build of iTunes 8 that was released on day one. (I wonder if this is why I couldn't get iTLU to work at first, actually.) Either way, if you downloaded it on day one, you may want to uninstall, re-download, and reinstall, especially if you are having trouble syncing after doing the 2.1 update.