oh yeah, also
larger target on same size of screen means
less content.
I think that's a very narrow view of the situation.
What do you mean by content? Do you mean graphical user interface elements? Because the iPhone and the Palm TX don't differ on content; they can both play movies fullscreen, display webpages, play music. But I don't know what you mean by "content."
However, I'm going to assume you meant "function."
So why does the iPhone have less function than a Palm-based PDA with the same sized screen, in terms of user interface?
I'll sum up some points made earlier in this thread:
1. The Palm TX has smaller buttons, but uses a small stylus for input.
2. The iPhone has bigger buttons, but uses human fingers for input.
That means that the Palm TX has more functionality per inch than the iPhone. However: they sacrifice ease of use and user expirience to obtain that functionality. It's harder to pull a stylus out of a slot, and tap the screen instead of using your own finger. It's something you have to learn; it's not a natural way of interacting with a computer. The best interfaces are the ones that are obvious, the ones that don't need explanation.
To simplfy my point: the Palm has more functionality, but is less usable than the iPhone.
Moreover: The TX only registers one (1) tap at a time with it's touchscreen. The iPhone registers several (possibly more) touches with your fingers .. this eliminates the need for several GUI elements that the Palm TX cannot operate without: like scroll bars and zoom in/out buttons. Since these are replaced by gestures, those GUI elements take up no screen real estate, and this gives the iPhone more "content."