An interesting comparison of the details between the iPhone’s keyboard, and the Android keyboard, as implemented on the HTC Magic:

A virtual keyboard lives and dies by the details. It’s not that there’s a single feature which makes the iPhone’s virtual keyboard better than Android’s; it’s death by a thousand cuts. A number of small differences end up making a huge difference.5 Apple obviously spent a lot of time getting every little detail just right (well, except for the ducking dictionary), while Google decided to go ahead with what they had – which is usable, but no match for what the iPhone offers.

The 10% difference in physical screen size (while still being equal in terms of pixels) probably reduces performance by well more than 10%