Why Are There No Decent note-taking applications for the iPhone?

Because the built-in support for text views are pretty lame, editing-wise, and to recreate all that Apple provides and more (to make a decent editing app) is a lot of work.

I'm thinking about a Google Docs serious editor that uses touch gestures more than has ever been done before, with pinch and zoom gestures to change margins, font sizes, etc. Or (para-mode) drag a whole paragraph left or right to move from <p> to higher levels of header.

I love my iPhone, but I still yearn for a device that will let me take notes as fast as pen and paper. By the time a note-taking application opens, I'd already have my note written down. (Application launch times already take iPhone apps out of the race.)

Though that's a little orthogonal to what you might have been trying to ask.

A keyboard would help.

They might be out there, just not in the app store.