I just noticed Colin Walker’s mention of the Microsoft "Shift" research project. No, it has nothing to do with the HTC Shift directly, but it does indirectly. In fact, the approach is relevant to all touchscreen devices!
The Shift project recognizes that it can be cumbersome and time consuming to grab a stylus for screen interaction, especially when that interaction might be one single tap before putting the stylus away. Unfortunately, with smaller screens we’ve seen small touch interfaces, so in today’s world the stylus is often needed. With Shift, the interface can be manipulated in small areas by re-rendering the target area where the user can see it, i.e.: not hidden under the finger. Additionally, there’s an easy to see offset cursor in the re-rendered area, providing visual feedback to show exactly what you’re pointing at. Very interesting and if my description was lacking (it’s hard to describe!), then hop over to the Shift project page for a brief video demo. After you watch it, let me know what you think because I see real potential here.