Too many people tend to think of open source software as free copies of other applications with the open source application lagging behind proprietary ones. The operative word here being copy; the proprietary application with millions of dollars of corporate R&D budgets behind it is portrayed as the innovator while the little open source project struggles to keep up.
Actually, this is not the case for many open source projects, and Firefox provides just one recent example of where the open source application is leading in innovation while proprietary applications follow. Microsoft’s adoption of Firefox’s little orange RSS icon as an industry standard has been the most public example of this phenomenon (reported below in Forbes). I would argue that Firefox is innovating ahead of IE in a number of areas including tabbed browsing, security, and user customization. Because of the active user / developer communities for open source projects, innovation is a natural outcome. For more information on user innovations, I recommend reading Democratizing Innovation by Eric von Hippel.