Having password fields in plain test is just ridiculous on regular computers. Even when I first saw how iPhone's password field works I though "What are they thinking".

The only reason it is useful on iPhone and other touch-screen devises is because touch-screens do not have same feedback as buttons. They need a way to show that you have entered the letter that you meant to enter. Sometimes, with long passwords it can become hard to even know that when you touched the letter it was entered into the field unless it gets shown.