“However, having such a high resolution on a phone screen will probably mean text messages are even harder to read.”

why couldn’t they use a bigger font size? which so much detail available on-screen, text should become easier to read, not harder. just look at e-paper…

The Vodafone 904SH has had a VGA screen made by Sharp for a while now:
http://www.vodafone.jp/english/products/model_3G/v904sh/index.html