I think this is a misunderstanding of the UX of phones. The fact that keyboard input is harder on a touchscreen than a physical keyboard is of course a disadvantage. But it is a much smaller disadvantage than the UX gains from having more screen space for content when you're not typing. Also, a touchscreen is much better for input than a keyboard for various navigation features - panning, zooming, selection, not to mention many styles of games are all more suited to touchscreen input then keyboard input.

So, the choice is between a phone with a good keyboard but half the screen size (horrible for the web, maps, photos), or a phone with a subpar but still functional keyboard with a full screen. The UX is clearly overall much much better on the second one.