I have relatively big hands, big thumbs especially, and I have found it surprisingly easy to type on the iPhone, both because of the predictive text feature, and the fact that you can slide your finger over the keyboard (when it's on screen) and pick up your finger when it is on the key you want. This feature is most useful in selecting punctuation or numbers quickly, since you don't have to actually switch to the other keypads, just hold down on the entry and slide to what you want and the regular qwerty keyboard doesn't ever really go away.
So far, I'm much happier than I was with my BlackBerry (Pearl or 8800) - I can cut my thumbnails shorter 'cause I don't need the longer nail to hit the tiny chicklet keys on the BlackBerry keyboards. 🙂