I disagree with this. I used to agree, in fact, I was certain I'd always be staring. Then one day after spending almost an hour instant messaging with an old friend who was almost never online while I was stuck waiting for an appointment, I realized I was doing something unthinkable.
I was typing without so much as looking at the keyboard at all!
I was so interested in the messages flowing from the other person who had no idea I was delayed in my typing from being on a phone that I had finally adapted to the virtual keyboard.
It's really quite simple, and of course, it's the reason I now hate the landscape keyboard (whoops!). I simply memorized where my fingers had to be for each key, subconsciously, and no longer have to stare. This is the same as touch typing on a physical keyboard I realized as with proper touch typing, you orient for the home keys but you do not somehow slide your fingers around the keyboard to feel where the next key is, that's preposterous.
When you touch type on a real keyboard you've simply memorized where your fingers should move relative to your original position. On the iPhone, my "home" position is the relative position of my fingers with my phone held with two hands in a specific way with my pinky fingers supporting it from the bottom and so forth.
So frankly the idea that you can't touch type on an onscreen keyboard is just yet another lie born from people's failure to realize that all interfaces besides the nipple are learned.