Smartphone Industry Poised for Innovation?

Im in the market for new cellphones for my wife and me. She wants to replace her small clamshell with a smartphone so she can check email and keep tabs on her schedule (though, frankly, Im not sure why since she always loses her phone and never keeps it charged, which as her co-dependent, I do for her). And I want to use a sleeker cell device with better web browsing technology.

However, Im disappointed with the models I see so far. Most smartphones just dont seem that revolutionary and many are loaded with extraneous technology. Really, do I need an MP3 player on my cell? I look at the 1.3 megapixel camera and I think, Why bother? And dont get me started on the Apple iPhone and its monstrous price. Yes, I know that I will get used to such things, just like Im already better adept at using predictive texting than I was months ago, and I may learn to love the trackball. But wheres the innovation?

I ask because I keep seeing rumors that Palm is once again looking to be acquired and that Motorola, Nokia and various private equity firms are among those speculated to be in talks with the once great handheld manufacturer. Personally, I cant imagine a PE firm interested in Palm. Many of the major investors are raising multi-billion-dollar funds, they may be better off spending their cash on an IBM or a Sun.

So Im curious to hear from you readers what you think of the Palm acquisition talks. Who are the frontrunning PE firms? More important for me and other consumers, does the sale of Palm bode well for smartphone innovation? Also, companies that develop software and technology for mobile devices, such as Handango, MobilePlay and SavaJe Technologies, raised capital last year, but whats the outlook for VC-backed startups in this space in 2007?