According to bloomberg (Re: Apple IPhone With New Camera May Be Released by June), Apple "may feature a touch-sensitive casing".

Have you ever used an application that displays detailed and interactive graphical information? Maps perhaps? What if you need to deal with a very specific point in that data? Your hand obstructs the most important information, and potentially interferes with the rest.

The smaller the device, the greater the benefits of this technology.

Offsetting the "pointer" so that your finger doesn't hide it isn't ideal at the boundaries of the display because the touch sensitive surface may run out before you can position the pointer over the desired area.

Imagine being able to grab the pointer "from the back", as you drag your finger across the rear of the device, the pointer moves with your touch across the screen, allowing and accurate and unobscured view of your information.

Additionally, from a user experience point of view, and the mechanics of the human hand, providing a touch interface on the back of the device makes it easer to interact with the device.

Picture trying to look up your flight number standing in an airport with a suitcase in one hand and iPhone in the other. As you navigate the application, cupping the phone in your hand, your thumb is required to stretch across the face of the device, affecting your grip and increasing the likelihood of dropping it.

With a touch sensitive surface on the rear of the device, it is much simpler to grasp the lower edges of it and slide your finger across the casing.

The obvious downsides are the use of protective cases and conversely damaging the device through wear and tear during its lifetime.

It's just one extra thing to break, but I think the pro's outweigh the con's.