The problem is, the higher the screen resolution, the more costly it is. 320x240 pixels is the best you are going to get for a Palm-format colour device, at least this year. Microsoft have their cleartype technology, which would make the above seems like 960x240, but only for text, and only in certain situations (monochrome on a colour device!).
I would prefer a monochrome (4 or 8 bit depth) display that is 640x480, but the same size. All the advantages of Cleartype, but in both directions, and you lose colour (but Cleartype loses you colour anyway!). Nice smooth characters, clearer displays etc. Palm will be dead in two years unless they make their display 320x320, the competition is just getting so much better.
Another problem of having a higher resolution in the same area is that it gets harder to read unless you scale everything up. I.e., a 10 pixel high font at 100dpi should be a 20 pixel high font at 200dpi (I think you will be able to get away with 15 pixels high, though). It is hard to read text that is 1/20th of an inch high!
Anyway, the future is with Readers (e-books). These devices are basically a combination of Paperback or Pocket size e-book readers, GSM/GPRS mobile phone, browser, PIM, email and fun games etc. These will become viable when 200dpi displays can be made cheaply - but colour is not important.
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