How tiny does the keyboard on a handset or smartphone need to be?
If you ask me, I’d say: “Not anywhere near as tiny as they are.”
I’d also say: “If you make an app for iTouch or iPhone, ensure that the keyboard flips into a larger, wider version when users rotate the device on its side.”
I have a friend who is a substitute teacher for a large school board. They have some sort of system with automated calling for telling teachers about jobs and allowing the teachers to accept the jobs. You have to press the right buttons at the right time, or you immediately lose the job. Several times I have witnessed where she inadvertently hit the wrong key on her phone, and thus lost out. Given that each such misstep costs hundreds of dollars (missing a day or more of work), it’s very frustrating for her.