i just read about this new xperia phone by sony that has a higher resolution screen than the iphone- 800 by 480 instead of 480 by 320.
This isn't anything really spectacular. WinMo devices have (in Europe/Asia) had 640x480 screens for a while now and Sharp has had a WinMo phone in Japan that's used 800x480 for a couple of years now.
These devices are simply deemed to expensive for the American market and for the most part they're right. People look at me strange when I tell them I've paid full MSRP for my phones for the past few years, the most recent being the Treo 700wx for $650. I'll buy the 800w when it lands on Sprint.
Now just imagine if the HTC Universal had been released in the US three years ago with it's VGA screen and MSRP of 1,299. Would AT&T (Cingular at the time) have really expected to sell any at 1,000 each after carrier subsidy? Unlocked Universals still go for $500 on ebay. This phone is three years old by now.
Don't get me wrong here, I'm not bashing the iPhone. It's a neat little toy (*rim shot*) and Apple did a good job devoloping it. I'm simply point out that higher-resolution screens have existed on phone before the iPhone and will after the iPhone.
You make the screen resolution for the device's UI. Honestly, you're not going to tell any difference on a movie running at 480x320 than 240x320 on that tiny screen. I've had a iPhone and a AT&T Tilt side by side an watched a video and except for the screen on an iPhone being larger, the picture quality difference wasn't there.
There's simply no need to increase the resolution on the iPhone as a knee-jerk reaction to a competitor (I'm looking at you HTC Touch). Apple should continue to use the same screen they've been using until its cheaper to buy higher-resolution screens, or a significant hardware/UI change demand it.