Throughout the iPhone and Touch system you use a keyboard since the OS doesn’t support handwriting recognition. Holding the device the ‘tall’ normal way (called Portrait), you have a narrow keyboard to use so you have room above it to see what you are working on. When you turn the handheld on it’s side (Landscape) you get a wider view – in most applications the keyboard is not supported in Landscape.
An exception to this rule is the Web browser (Safari). If you hold your iPhone / Touch in the Portrait direction and tap the URL address area of the Browser, a keyboard will appear to edit the URL text. If you then turn the device on it’s side the view stays the same. But, if you turn the device to Landscape ‘then’ tap the URL bar, you will get a larger and wide keyboard. Much easier to type (especially thumb typing).
An application that you may want a wide keyboard for is eMail. Perhaps this might be a ‘feature’ Apple adds in the future. An application that offers a wide (landscape) keyboard for email is Wide WisE-mail along with many other additional email features. Here is a link to it in the iTunes App Store
Wide WisE-mail