I think it's funny that everyone is saying that the screen would be too small. First off the iPhone is quite small and is quite useable, plus if it where touch screen you could make the whole front of the thing a screen, as you would no longer need all of those useless knobs, and buttons that are currently there.
As far as cost they aren't really that much more expensive than regular screens any more, and the cost is coming down fast, especially with all of the Cellphones, and next-gen PC's becoming touch, and multi-touch compatible. I guess it could be a bit more expensive for a non-stock size, and shape, but again you won't need all of those useless knobs, and buttons anymore, which also cost money.
The only real disadvantage I can see is the current accuracy of these types of screens is quite low, plus the fact that the face of these screens has a limited life span due to the fact that you are rubbing it all the time.
Both of these problems, though, could become a non-point as the technology advances.
Either way it's all about what Cliff thinks is viable when he starts developing the next generation of his products.