It makes sense on the iPhone since you can only make a cell phone so big and using part of it for a keyboard reduces the size of the screen. I think everyone else is just trying to cash in on the coolness of the iPhone.

Touch screen tablet PCs never took off. There just isn't a big market for them, the market is pretty much dead for tablets. Touch screens on mobile devices and netbooks (super portable laptops) are going to be popular because they make sense in that space. There is no room for the mouse and keyboard paradigm when you are on the move. Blackberry is now releasing their first touchscreen keyboard, where in the past they held strong to their button mini keyboards. True blackberry users probably will not switch, but blackberry has to expand their product lines to compete with the interface that is gaining in popularity. I know your post is kind of talking about desktop touchscreens. The HP TouchSmart seems stupid in some sense, but there would be some advantages. You can see there is a mouse and keyboard used on this system too, so it's not a "touch screen only" solution. You would only have to touch the screen when it made sense. Having multiple points of contact for certain things would be great advantage over only having a mouse pointer. Page layout, photo manipulation, and a few other things would benefit from having "Minority Report" touch interface. Physically touching the screen to rotate and resize photos alone is pretty cool. You should play with an iPhone for a little while, you might be surprised how useful a multi-touch surface really is. Finger gestures on touch screens that support it are extremely fast to use and intuitive.