Yes, I agree, which is why I chose the Treo over several different BlackBerries, but a bit thinner would be nice. My Treo's almost as thick as my laptop...

A recessed screen is indeed more protective if you set your Treo down upside down or use a close fitting case, but stuff can get stuck between the case and the screen. A drawback of the recessed screen is that the paint on the area around the screen may get worn off, which happened to the chrome on one of my 650s.
A flush screen is bad if you use a screen protector. The screen protector may get peeled or stuff will gradually find its way between the screen protector and the screen, scratching the screen as it moves in.