It now appears that previous reports around Windows Phone 7 (WP7) getting multiple updates in 2011 may have been on the mark. Paul Thurrott has the lowdown on two of these updates – codenamed 'NoDo' (minor update) and 'Mango' (component of a major update).
NoDo stands for "No Donuts", an obvious dig at Google's Android codename, and is a minor update. It should RTM within the next few weeks, be approved by carriers soon after and be available for end users in early February. This update brings copy and paste to WP7. It also features support for the new Qualcomm 7x30 chipset, a CDMA location stack and various other fixes – presumably performance and stability related. This update may be shown off at the upcoming CES keynote.
Mango, is a component of a major update. It's believed that this major update will bring the platform to Windows Phone 7.5 – although it's not clear if that name will be used officially (the current Windows Phone version is technically 7.2). Mango includes a significant browser update, akin to Internet Explorer 9 (Trident 5 rendering, HTML5 and Silverlight support). Thurrott has information that this update will also bring entertainment-related updates/features.
As for the frequency of updates, Microsoft is taking a service pack-like approach to updating WP7 (according to Thurrott's sources). This means that updates are released in bulk, rather than "one fix at a time". He, and presumably many others, would prefer that Microsoft took the latter approach.