If you are sending tons of emails from your phone, then yeah, the physical keyboard blows the onscreen one out of the water. But when you are running a dozen apps with completely different functionality, but all of them are fairly simplistic, a touch-screen (especially a good one) does a better job on average, as compared to a keyboard where you quickly descend into the buttons being meaningless ala Nokia endless 2-button menu navigation.

Now obviously you can have both (I bought a G1 back in '08 and I like having both), but it took balls for Apple to make that decision and say that a touchscreen only would be sufficient. However the impact of that decision on the elegance of the form factor is undeniable, and something that I imagine had a large if unmeasurable impact on the success of the iPhone. It's the type of thing that you need a product visionary at the top to achieve, otherwise it's DOA at the first board meeting.

Touch screens may turn into a technology that's omnipresent although "educated" consumers try to avoid it (like glossy laptop screens or high-megapixel cameras with tiny sensors)