Smart Keyboard
I’ve never been a huge fan of the stock Android keyboard. Although Google tells us that it is does in fact utilize multi-touch capabilities, it sure doesn’t feel like it. I’ve usually replaced the default with the free but illegally distributed HTC’s Sense IME (for functionality and looks) or with the paid app, Better Keyboard (for the nearly countless themes and options).
In my quest to test as many replacement keyboards as possible with the Nexus One, someone suggested I try out a free replacement called Smart Keyboard. I did, and you can see evidence of its perceivable multi-touch in practical use by viewing the third video posted at this link. (Smart Keyboard turns up at 8:15.)
The more I use this one, the more I love it. There are no skins or fancy options just yet, but it feels great. It’s free, so give it a shot.

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