One of the strengths of the Android platform is the flexibility to replace part of the UI with a different component app. This is certainly true of the on-screen keyboard. Coming from an HTC Hero to the Nexus One, I really missed the Hero's keyboard provided by HTC's Sense UI. I installed Smart Keyboard Pro from the Market and found this a lot better, though still room for improvement.

Since then, though, I have discovered Swype and SlideIT. Unlike the usual tap-entry keyboards, Swype and SlideIT both work by sliding your finger across the keys of the word that you want to type. You only lift your finger at the end of the word. Sounds weird, but it really works very well. I can enter text around three or four times quicker in this way. Swype (currently in beta) is only available for Nexus One and Droid, due to screen size. SlideIT scores over Swype in that it is available for any Android phone and, importantly for euro-market, has several language packs. Swype is the better-looking of the two, though.

IMHO, the Swype and SlideIT approach to on-screen text entry largely does away with any complaints about no physical keyboard.