Apple Acknowledges SMS Messages Out of Order

Apple has acknowledged a flaw in 1.1.3 that may cause SMS messages to be displayed out of order.

According to Apple this can occur if the iPhone is not displaying the same date and time setting as the carrier network time.

The officially provided solution for the time being is as follows:
Make sure iPhone is setup to receive the network time. Choose General > Date & Time and turn Set Automatically to ON. (Note that in some locations, network time may not be available and in some cases, you may not see this option).