Well, with a sufficiently large font, and with the assumption that you only want to move whole words, fingers can work surprisingly well. If you want to move only some characters in a word, Shift + d-pad can help on a keyboard device, or manually backspacing the offending characters, and retyping them elsewhere.

However, I am rarely amused by programs that interpret a drag from somewhere in the middle of a word to include the whole word; I think in a character-based way when editing, and would rather make 3 attempts every time to select a string than to be completely unable to get some strings I want, even though it actually gets what I want 80% of the time.

Edit: Just a thought re: brainwaves: Why not an accelerometer-controlled cursor? Obviously not on all the time, but give us 4 buttons on the top edge; one enables accelerometer control of cursor, and the other three are mouse buttons 1, 2, and 3.

And since everyone likes kinetics in their scrolls, kinetics in their cursor (think rolling a marble around on the screen) should be cool, too, right?