RadicalDad wrote:
I must say that I find this distinction ridiculous.
"Hardware" layouts do need to be separate and different, since they need to handle over 200 possible key combinations for a variety of different hardware keyboards that users might have. But there is indeed no excuse for Apple not providing qwerty, azerty, qwertz versions of the screen keyboard for Hebrew like it does for many other languages.
Your firm recollection would seem to indicate there must have been a Hebrew QWERTY screen keyboard earlier, perhaps misnamed in Settings by Apple. My Google research so far unfortunately only comes up with pictures of the non-Qwerty version for iOS 3, 4, 5.
http://www.jweekly.com/blog/full/38377/first-look-at-the-iphones-new-hebrew-keyb oard/
http://www.youtube.com/watch?v=cDExgQFU6rY
http://www.pcmag.com/slideshow_viewer/0,3253,l=256731&a=256731&po=8,00.asp