Host (Optical) Technology Ltd. out of Taiwan has published photos, blueprints and specs for what are purported to be new iPhone/iPod Touch 3G screens. Both screens are up to a full half-inch smaller than the current 3.5" wide screen.
Host refers to the panels as ‚Äúprojected capacitance touch panel[s],‚Äù and promises that they will have ‚Äúno significant‚Äù aging effect (i.e. they won't get less sensitive over time) as well as being more durable, waterproof, plus resistant to high humidities and temperatures than current screens.
While there are doubts that the 2.8" screen would be practical for a full-sized iPhone, it would make sense for an iPhone or iTouch "nano/mini" model.