Personally, I find the on-screen keyboard of the iPhone one of the easiest and most effective virtual keyboards ever developed. One flaw, however, is that you can't use it in landscape mode when you're typing e-mail. While Apple had every opportunity to provide a fix for this through the numerous firmware updates they've released, we have yet to receive a viable solution from the company.
Thank goodness for 3rd party applications that this dilemma now has a solution, albeit not being free of charge. The TouchType app allows you to type in landscape mode and forward the message to the iPhone's email app for sending. It doesn't fully integrate itself into the iPhone's email app since Apple doesn't allow it, but unless Apple comes out with their own solution for this problem, then TouchType is the best way to go. It'll cost you 99¢ to download via the App Store, a small price to pay for such a nifty little app. Besides, future updates for this little app might make it possible to send messages to other default iPhone programs as well.