I definitely agree a language model is key to better input schemes beyond the current state of the art on mobiles .For instance RIM/TrueType, iPhone, T9 seem to only utilize a dictionary based solution as opposed to using a full fledged language model limiting their effectiveness.

That said, while I like the language model I just don't se this interface being extremely usable. I believe there is a new interface waiting to be invented that, with this language model technique, start to approach keyboard typing speeds. Swype seemed on the right track, especially by reducing the learning curve and leveraging a QWERTY model, but I hope that even better options develop. For now a slide-out keyboard on my iPhone would be good enough for me. The PalmPre may even convert me if it works as good as it looks.