There is quite a choice for N8x0 when it comes to terminal apps, yet with N900 we are stuck with the stock one. While very good (use it often and it is practical/functional) it lacks in few areas.
Main problem: One pixel border around the screen - getting 80x25 is impossible (79x25 is the closest it gets), some apps will display using only part of the screen with smaller font settings, some won't. Using smaller font is straining on the eyes though.
You can control geometry only through font type/size - why no setcol/setrows? This would help with apps that require certain setting.
With the recent inflow of awesome text based games (most roguelikes thanks to AapoRantalainen) it would really be great to use them easily to their full potential, taking whole screen and less straining on the eyes. There are quite a few open source terminal apps out there, though hildonizing them is probably not an easy task. Maybe osso-xterm could get updated?

MRXVT passed the test. BUG known, focus problems when returning to open session,FIX lock/unlock phone.

http://packages.debian.org/squeeze/armel/mrxvt/download

Settings for 80x25 full screen attachment 1 (rename to .mrxvtrc and place in /home/user/)
Font thanks to Addison attachment 2