This is really weird. I updated my iPhone to iOS 5 today, along with iTunes to version 10.5. According to Apple's own documentation, I should have an option to "sync with this iPhone over wifi" under ...
I've an iPhone 4 and the new iPad, and iTunes running on Win7x64, all are the latest version. Wifi sync for each device is enabled in iTunes. Both are able to sync wired. Basically it's a crapshoot ...