Inside sources say that a major update is headed for the Motorola Droid. It will be bestowed with Android version 2.1, and with the update comes some major new features. Updated: The update is coming this week!According to one of Engadget's "trusted sources", a new update is moving its way through Verizon Wireless's testing labs. The source says that a lot is on store for this update. It includes:

• The update is based on Android 2.1. The build currently being circulated is identified as 2.1 version 1, mirroring the update just pushed to the Nexus One last week. That means most of the under-the-hood improvements and big fixes will be on board.
• Google Goggles is now pre-installed. Google Goggles has gotten mixed reviews, but I happen to like it. If you've already installed it, this is a non-issue.
• The browser's now multitouch enabled, just like Google Maps 3.4. That is most excellent news. Multitouch in the browser is vital for touch phones, and a long-overdue feature for the Droid.
• No Flash. This is not a big surprise. Adobe has said that Flash 10.1 is on the way for the Android platform, but hasn't given an exact timeframe for when it will rear its head. Perhaps next week's Mobile World Congress will change that?
• The home screen will still have the same look as 2.0.1, meaning it doesn't adopt the Nexus One's rotating 3D grid of app icons. It still uses the Android-standard pull-up drawer tab at the bottom. Can't say I am too surprised here. Google probably wants at least some of the Nexus One's features to remain unique.
• No active wallpapers. This is one of the neat-o features of the Nexus One. It's a shame this won't be included, though it's not the end of the world.
• The news and weather widgets introduced on the Nexus One are included.

Engadget's source did not indicate if or when this update would actually become available to Droid users. As usual, Verizon Wireless hasn't even acknowledged the report, so take it with a grain of salt.

UPDATE:

Today Motorola said via its official Facebook page that the Android 2.1 update will be pushed out to Droid users some time later this week.