... but I do have a problem forcing average users to run bitcoind on a computer somewhere, forward ports to it and set up API access via their phones - that's the kind of thing that keeps bitcoin solidly in the realm of us geeks and out of the hands of normal folks.
Still, I'd like a better feature set and perhaps a choice to use MyBitcoin or some other service than instawallet.
Agreed. I think the only viable option would be a light client that doesn't store the blockchain but only receives it from the network (maybe a trusted node) and check it against wallet transactions. So you only have the wallet stored on your phone but don't need to trust a third party with your private keys.
I'm betting there are several of those clients in the works.