I see the curved screen as a marketing/differentiation tactic. They usually toot it as a way for you to reach the screen better or for the phone to fit your face more (like the G1's "chin").
I have a 4" Samsung Focus right now with Windows Phone 7. The screen size doesn't bother me too much. I use it one handed a lot, especially on the subway when I'm holding onto a pole while checking email/Instapaper.
One thing that does bother me a lot about a smartphone trend: I despise capacitive buttons. I've accidentally hit the back button so many times while trying to load something.