Looking at their API docs it looks closer to rsync than to an API you could use for collaboration. I don't think you could edit a document on your iPhone and iPad at the same time. Both clients' changes would just stomp over each other.
https://www.dropbox.com/developers/sync/docs/ios
The mobile sync system we've built gives you fine grained control of conflicts. It's got a native iOS API and is more like CoreData than Dropbox. It's been used by a bunch of AppStore apps over the last year, and we just announced a more powerful database backend.
But while that paradigm might work fine on a desktop, where you can have multiple files viewable at a time (i.e. different halves of the screen), and an extremely easy way to copy-paste, it does not work well for a touch device, where both of those assumptions are invalid.
1Password is a great example of an application doing this well -- when there are conflicts, 1Password detects this, and there is an application-specific workflow that helps the user resolve the conflicts. It's pretty slick.
I'd love to see someone use this to build a browser-based way to use web-app-type things stored in Dropbox. I have a TiddlyWiki [1] stored in Dropbox, and I can view and edit it from any computer with Dropbox installed. On mobile, I can view the .html file (with effort) using the Dropbox app, but can't save, follow relative links to other Dropbox files, or do things like load external .js or .css files from Dropbox.
The beauty of HN is that this is pretty much the only place where you can meet the person with exactly the same exotic nerdy problem. I am thinking about moving from TiddlyWiki on Dropbox to Simplenote that (IIRC, at least when you pay) can synchronize notes to Dropbox, has a native iPhone app and a whole roster of 3rd party clients for other mobile OSs and desktop clients (http://simplenote.com/downloads/).
I was exactly the same TW/dropbox until a couple months ago...
I'm almost finished polishing up an App I wrote for personal use that edits/ synchs a folder of .txt files. (Maybe this weekend I'll get around to finishing it?)
Its not groundbreaking but it'll be available iOS and Android - then use your favourite text editor on pc/mac.
Email me if you want to beta test in a week or two?
I use PlainText on iOS and Notational Velocity on OS X. NV supports a [[link]] style of linking between pages. Sync as txt files into a subfolder on Dropbox.
Unfortunately, it looks like PlainText doesn't support those links.
I've had an idea for an app that would need some kind of sync service. This looks promising but I'm not sure about asking users to provide their Dropbox login in my app. No, I'm not worried about security because that information stays local to the device. I guess I'm worried about the user experience. I suppose it's better then having them create another login for my home brewed service.
I wonder if this will allow creation of folders with characters such as ":" in their names. Dropbox supports these characters in their clients but the API rejects them making it impossible to operate on some files. Very annoying when you've put the effort in to making an app to work with Dropbox then discover the API is subtly crippled and they apparently have no plans to fix it.
Looking at their API docs it looks closer to rsync than to an API you could use for collaboration. I don't think you could edit a document on your iPhone and iPad at the same time. Both clients' changes would just stomp over each other. https://www.dropbox.com/developers/sync/docs/ios
What I'd like to see is someone offer operational transformation as an API. http://en.wikipedia.org/wiki/Operational_transformation