You can get to it through the Keyboard option under General in the Settings app.
Settings->General->Keyboard
Tap on Keyboard and you’ll find the new option for Shortcuts near the bottom of the screen. omw which expands to on my way is already there and serves as an example.
To create a new Shortcut, just tap on the Add New Shortcut button and this input window will display.
In this example the Shortcut mo will be used to expand to the word macobserver. Fill in both fields and tap on Save.
The Keyboard screen will reappear with the new Shortcut listed. Shortcuts can be used in any app that allows input. To delete a Shortcut just swipe right and choose delete.
Type the Shortcut and the expansion will appear as if it were an autocorrect suggestion. Hit the spacebar and just like autocorrect, the replacement will appear. That’s all there is to it. Shorcuts is a little thing but it’s tiny touches like this that make iOS 5 so wonderfully useful.
If you’ve found another hidden gem, be sure to write about in the comments.