It is pretty clumsy trying to type on the iPod screen since there are no buttons and the little virtual key are pretty tiny. You can get bigger buttons by turning the iPod sideways. I downloaded a typing speed app and found I could get about 15 words per minute using one finger and the little keyboard. Turning it sideways and using my thumbs to type, I got about 17 wpm, but I made a lot of mistakes.
I did find a couple of good tips for the iPod keyboard. One is you can hit space twice at the end of a sentence and it will put in a period and capitalize the next letter. This is faster than switching to the number and punctuation screen where the period is. The other tip is that for commas, you can hold down the 123 button instead of tapping it which brings up the numerical/punctuation keyboard and then drag your finger to the comma and let go. Then you get your comma and are right back to the ABC keyboard. If you just need a number, question mark, or whatever, you can do the same thing.
Anyway, one of the early alternative keyboards was Swype which let you just drag your finger from one key to another and it would figure out which word you wanted, but is no longer available. This is kind of similar to myKbd which I used on the Palm TX after Palm had to give up Graffiti (where you would write the letter with a stylus) and then developed my own keyboard layout called Salamander.
Another concept is called MessagEase which is a grid of 9 squares with the most common letters on them. To get other letters you slide from one square to an adjacent one. For instance, to get an O, you just tap O, but to get a D, looking at the picture below, you slide from the O to E. The squares are big enough to easily hit with your finger and the sliding is distinctive enough that typing is very accurate (whereas I’m always hitting the wrong key on Apple’s keyboard). A lot of common words can be spelled just by tapping on the most common letters. After working on MessagEase for a while (quite a while, they have a built-in game that helps) so that I could memorize where the letters are, I was able to get up to about 17 wpm, which is about the same as what I was getting on the Apple keyboard, but with a lot better accuracy (playing with it some more today I got up to 20, but I can’t get that high consistently yet).
The problem with any alternative keyboard on the iPod is Apple doesn’t let developers install it in place of the Apple keyboard. So if you want to reply to an e-mail using MessagEase, you would need to leave the e-mail app, go to MessagEase, type in the message, then go back and paste in the text (the text is copied to the clipboard automatically). But it seems like a third party app like NoteMaster could make MessagEase an alternative within its program. That may be what MessagEase is after by giving away their app for free right now: hoping to get a user base they can market towards other programs (and Apple).
There is another concept called GKOS which I looked at a little. It involves buttons on the side of the screen that you press with your thumbs. Well, that’s only 10 buttons or so, so to get additional letters a lot of the buttons are like shift keys where if you press it, it will turn some of the buttons on the other side of the screen into different letters that can be pressed to get a letter. So you have these key combinations (“chords”) that create letters. There is a YouTube video of a guy going pretty fast, but I tried out GKOS and it seemed pretty confusing.
One idea I had when I had the Palm was to put rocker buttons on the back of the device. Then you would hold it with both hands and your fingers would each be on one of the rocker buttons. If you pressed the buttons with the fingers on your left hand, you would get A S D F. Your right hand fingers would give J K L ;, just like on a typewriter. Then if you kind of bumped your left finger towards the middle (thus the rocker switch with 3 possible clicks: down, in, and out) you could get upper row keys from a keyboard. Since some fingers on a keyboard do more than 3 keys, there might be more buttons needed for index fingers or those buttons could have additional degrees of freedom, more like little joysticks. Numbers could be done with some kind of shift, possibly operated with your thumbs which would be on the front of the device. I thought this would work pretty well for people who already know how to type and don’t have to look at the keys.