I have been testing Sparrow 1.2, and while I am no fan of landscape mode on iOS (I never use such functionality on the iPhone), I recognize how some users are going to perform some serious typing for their email replies thanks to Sparrow 1.2. The whole compose interface has been updated to take advantage of the different orientation.
I have tested the feature with Gmail (both regular and Google Apps accounts) and iCloud, and I was pleased to see Sparrow differentiated visually between labels (for Gmail) and folders (for iCloud mail). Because label management has been implemented in the mid panel -- the one Sparrow uses to list an account's mailboxes -- you won't be able to swipe-to-delete; instead, management has been assigned to a new "Edit" button that shows up in the Folders or Labels sections of a single account.
Meanwhile, the Sparrow team has also confirmed that Apple won't allow them to implement push notifications through the VoIP framework, as they did in early betas of the app. Sparrow will have to build notification support on the server's side, and the developers confirm this will require a yearly subscription for Sparrow users willing to use push notifications. Previously, the Sparrow developers said push support would be coming "with or without Apple".
With proper label management, landscape mode, localization in 9 additional languages, and bug fixes, Sparrow for iPhone continues its march towards becoming the best email client for iPhone. You can find Sparrow 1.2 on the App Store today.