I think we will move back slightly in the future, there are certain things that do need keys, however keypads as such I think will become less and less popular.
For example keys on the side of phones should increase (both the iPhone and the Touch HD don't have enough buttons on the side, only volume) if they are to be used as music/camera devices. At the moment it's really only volume keys that are there but after having various SE K*** phones going to a phone you have to take out of your pocket and press the screen to pause is a pain, same with taking photos by pressing the touch screen.
One positive I can see about touch screen phones is the fact you can make them weather/water proof much easier, due to the lack of buttons and only entry post being the battery cover. In the past typing on a weatherproof devices keypad was a pain, now with touch screens it won't be any different.