i agree fully with the OP.

list of problems with the new virtual keyboard:

1. much smaller on-screen keys... so small that its common to hit the spacebar, backspace or the wrong letter instead.
2. spacebar is moved to the middle and cant be accessed as fast as before (when it was nearer the right thumbs center position)
3. backspace is moved to a really awkward position and is small.
4. removed keys... the symbol pages have only 31 keys instead of 33 from the old one.
5. wasted space... the old keyboard used almost the whole screen for keys. now we have dead space to the left and right of spacebar.
6. symbol keys is harder to access... it requires 2 presses to access the 2nd symbol layout. one click to get to get to the first page of symbols - then another one to get to the next.

...all these problems were added to the virtual keyboard in PR1.2... the old virtual keyboard made it easy to type quickly, so i hope we'll get it back and bugfixed... apart from that PR1.2 is a great update.

EDIT: Theres actually only one advantage with the new keyboard - bigger text display... u can see more of what u write, but the cost for that is much smaller, and harder to use virtual keys... :EDIT

ps. a nice touch was that the hardware keyboard got a little improvement instead - accessing blue symbols by holding the symbol button down a half second