Let me tell you, I have never before owned a smart phone; so my experience of typing on tiny keyboards is zero, and obviously the iPhone is more of a handheld computer than a phone.
I have had no problems with the virtual keyboard at all. Within the first 5 minutes, I was able to type as fast as a cheetah runs with both thumbs and almost no mistakes were made. I would say that the OS and me have a 97% accuracy.
The only issue I have found is when I type in a different language, the software wants to fix what I type in Spanish to the closest English word, but that is completely acceptable since I did not expect to have multiple languages with the iPhone.
The keyboard is indeed wonderful......