The 5800 just isn't. 640x360 means much fewer pixels, much fewer characters when you're reading. And it's hardly a standard resolution either. If it compares to 800x480 in your eyes, you're trying to hard.
Also, you're mistaken about the HTC display sizes, the Diamond2 is a smaller phone. Display_Diagonal: 3.2"
Read up on this phone and you might find that the display is popular. HTC stats are very popular. The OS isn't. Yes, the phones are bug ridden. But not because of the display!
The big thing in the phone world is that 800x480 is a new cool thing on high end touch phones. It went from none except PDAs to a whole bunch of them. Symbian trails behind. Nokia would not want Symbian to trail behind.
"Megapixel race". Pff. iPhone started a trend of big screens with low resolution. Now we get big screens with very good resolution.