A nice touch phone (e.g. WM7, iPhone, Android) demo version is available here.
An experimental Silverlight version is available here.
XNav is a fast one-handed (one-thumbed) text input system on a touch screen or capacitive sensitive surface. However, this demo is meant for use with a Tablet pen or mouse. For more information, read this nice two-pager.
Move your mouse (or hover your pen) around the "flower". No need to hold down the mouse button. On an iPhone, glide your thumb across the screen.
Each stroke starts and ends in the center (5); making it easy to stay oriented (even without looking). The alphabetical arrangement makes learning the system easy but it is actually a carefully planned layout. Most common letters and space/backspace are quick strokes from center to a petal and back. For example, 'e' is just a quick up/down stroke (5-2-5).
Less common characters (in English-optimized ETAOIN SHRDLU order) are sweeping strokes through two or three petals. For example, 'b' is 5-1-2-5, 'c' is 5-1-2-3-5 (or the somewhat forgiving 5-1-3-5 if you overshoot it a bit).

Soon enough, you stop thinking on a per-character basis and get used to the "shape" of whole words and common prefixes and suffixes. For example, here is my name:

You get to the point that words like "the" and endings like "ing" become single forms.
You can switch to Caps mode by swiping 5-8-5. It will switch back to lowercase after you enter a character. If you want to lock it in Caps mode, swipe 5-8-5 twice, then once more to unlock it. There are also two symbol modes (5-6-3-5 and 5-8-9-5).
It's not necessary to switch to symbol mode to get numbers (although you can). Instead, just tap/click the petals. The idea is that XNav may actually be a capacitive sensor under the keys on a regular 12-key phone on which you dial as usual or input text by gliding your thumb over the keys.
You want to make a Windows Mobile based device with an XNav input system? Great, lets do it!
Note: this is Microsoft and NYU Intellectual Property (see details). I first saw it in a slick demo done by John SanGiovanni who has now taken some of his cool UI ideas to ZenZui.