It's starting to look like v1.3 will indeed hit the AppStore today. The status of the 1337pwn XBOX Live Friends Application v1.3 is now listed as "Ready for Sale". The update hasn't yet appeared in iTunes or the iPhone/iPod Touch AppStore application, but you can expect it to show up over the course of the day.
It's there and now appearing as an available update for most users. Again, this is a bug fix and performance release. Messaging now works properly for gamertags with spaces, network code has been redone with better exception handling, and the list update performance has improved considerably. Thank you to everyone that noted the improvements.
don't pwn alone(tm)