The HTC G1, available as of Wednesday from T-Mobile, avoids this by providing a full, physical QWERTY keyboard. Despite having the real keyboard, some G1 users appear to be unhappy with the lack of a software keyboard. You have to open the phone up to perform any serious text entry, which gets old after awhile. With all that screen real estate, you should be able to use a software QWERTY.
Google's road map for the Android platform has the software QWERTY keypad in there, but the maps points to a release some time in the first three months of 2009. For now, the G1 users will have to make do with the real QWERTY keyboard.
The real take-away from this, however, is that any subsequent Android-based devices that hit the market before the software QWERTY keyboard becomes available will have to have a hardware keyboard.
Those waiting for a touch-only Android phone are going to be waiting for quite a while, it seems.