On screen buttons are the way to go.
First don't look at them as using screen space. Look at them as decreasing bezel size. If there was a physical button the bezel would need to be bigger. Personally I'd rather have the screen be bigger and less bezel on the bottom.
Secondly they adapt. They turn to small barely noticeable dots when watching movies and viewing pictures. They can also change by adding a "settings" menu (fourth button) if the app calls for it.
Third. They move, rotate the screen from portrait to landscape and it stays on the bottom.
Fourth, they are on screen so you don't need to brace the device to press them. I find this annoying with my iPad I need to support it for a home button press which has almost caused me to drop it several times.
Fifth. With ROM's they can be modified. I don't know the extent because I never messed with it but I've seen the on screen buttons different colors.
The on screen buttons on my tablet are one of my favorite things about it. Like mentioned it would be cool if you could hide them though.
Everyone's personal preference is different I suppose, I absolutely detest them. Even when they shrink down, they still take up the same amount of space. I find myself also hitting them all the time by accident when using the onscreen keyboard, putting my back into the home screen or somewhere else.
You don't need to expand the bezel area to get a physical button on there, just look at the galaxy note 2 and where it's placed. I'd place it on the bottom of the unit if held in portrait mode, so it would be on the right if in landscape mode, it's very natural to use it like this. You don't even need a full physical button, you can simply do capacitive buttons, the Note2 actually does both with a physical home button, and 2 capacitive buttons around it.
Anyhow I don't mean to complain, I am just going to root mine and it looks like there are programs out there which will allow me to get full screen. I'm already trying button saviour and it's pretty good.
