It is still based on XPath 1.0. I'm not sure when 2.0 support will enter in--probably not until it becomes finalized. It is still in the Candidate Recommendation state, later to become a Proposed Recommendation, and the finally a W3C Recommendaiton. It is still a long way off from being finalized.
See:
http://www.w3.org/TR/xpath20/
http://www.w3.org/2004/02/Process-20040205/tr.html#RecsCR