Now LG has come out with exactly that. They first unveiled the LG-GD910 at the CES 2009. It is the World's first commercial Touchscreen Watchphone. It features a 3.63cm (1.43-inch) touch screen, 7.2 Mbps 3G HSDPA compatibility, built in camera with 3G Video Telephony (VT) service and GSM Quadband Network capabilities
The Watchphone has a curved tempered glass face, high quality metal casing and is only 13.9mm thick.
You have to use a Bluetooth headsetto make and receive calls even though you can use the phone without it. I would imagine useing the buit in speaker on the phoen to be quite difficult to use. I think it would be uncomfortabel to use the speakers on the phone.
Other extras include an Voice Calling, MP3 player and Text to Speech.
In the UK, you can only get it from Orange for £500.
Visit www.orange.co.uk/watchphone for more info