The update adds a new section to the LittleBigPlanet section of the game: the LittleBigStore. Here you can see all the costumes and packs that are currently for sale and purchase them. Bought a costume and don't want to search through your Popit menu for it? Simply select it in the in-game store and you'll automagically put it on. Pretty handy. Selecting a pack will "award" you with the items, just like at the end of a tutorial level, so you can see exactly what it contains.
The second big addition in version 1.07 is a revamp of the level search screen. You can now view the highest rated levels, the most hearted levels, the newest levels and the busiest levels. You can also search for levels via a text string, or via tags. Hopefully this will make finding awesome levels a lot easier.