Suggestion: modifiable themes. Or if you don’t want to bother with that, I have a suggested theme. Why? On my laptop, my editor is BBEdit, and my suggestion will reflect what I’m using there. The goal is to make things easier to find while editing, while remaining somewhat subtle, less garish. The theme I’m using in Textastic is “Mac Classic”, which comes close to my needs. Here’s a description of my ideal theme, for just HTML and CSS. Colors approximate, shown as HTML web-safe names.
HTML:
Text, code punctuation, failed code—black;
tag names (e.g., “<a” of “<a href.…”)—mediumblue (#0000cd)
tag value names (e.g., “href" of “<a href=”)—darkblue (#00008b)
quoted tag values (e.g., “120” of “<img height='120'”)—green (#008000)
unquoted tag values (e.g., “120” of “<img height=120”)—purple (#800080)
entity names (e.g., “&”)—maroon (#800000)
comments (e.g., “<!--…-->”)—darkgray (#a9a9a9)
text and comments—font-weight:normal; else—font-weight:bold;
CSS:
element name (e.g., “p” of “p{color:black}”)—mediumblue (#0000cd)
element value name (e.g., “color” of “p{color:black}”)—darkblue (#00008b)
quoted element value (e.g. “Helvetica Neue” of “p{font-family:'Helvetica Neue'…})—green (#008000)
unquoted element element value (e.g.,“black” of “p{color:black}”)—purple (#800080)
special values (e.g.,“#000” of p{color:#000}”)—maroon (#800000)
comments (e.g., “/*…*/”)—darkgray (#a9a9a9)
failed code (e.g.,“p color: black”)—black
comments—font-weight:normal; else—font-weight:bold

This one should be pretty straightforward. I am replacing a 3 letter word with a 4 letter word and after replacing several instances within a selected area of text, that selected area has shifted (gotten smaller) by the same number of characters. You'll want to test it a bit with different lengths to see exactly what it's doing...

This picture should show you exactly what I'm talking about. http://stevenlu.net/files/12_4_24_screenshot.png

Can you tell us, when we're about to recieve the next update?

Or could you release smaller updates more often? 

When I use HTML and CSS files, I have to rewrite every path that is in code. Why don't you make every path relative to its super directory? That's what I mean: in the Files view, I create a new folder called Project, where I put every file that belongs to that project. Inside it I create and index.html file and a folder called "images". Now when I write the code I would like that paths should be written as /images/image.png instead of adding even the main folder name like /Projects/images/image.png

So that if a file has been changed elsewhere than Textastic App, automatically downloads the files modified (you can change that in the settings as well)

I tried lots of combinations of copy/paste and founfpd that if the copy included undisplayed trailing paragraph marker ( it shows as a blank at the end of the paragraph in Pages) the paste will crash TT if and only if it's the final character in the paste. Interior paragraph markers paste fine.

Great job on the app!  Small suggestion: I'd love the ability to view the development tree in its entirely, like you can in textmate's gutter.  Would make moving between files much easier without taking away any functinoality.  Perhaps a file view option?