Currently the ARM frequency is fixed at 700MHz (a different fixed value can be specified in config.txt).
I'd like to support the cpufreq mechanism in linux to allow different profiles (e.g. performance or power saving), and the ARM frequency will vary with processor load.
It needs some plumbing, but it can be done. There's more important things to do now, but this is on the list.
(As an aside, the GPU does this sort of thing by default).