Well, that is one of the ways to decrease power consumption and in turn can have a smaller battery and a slimmer form factor as with the iPhone, not to mention lower production cost. By increasing the display size from 320x480 to let say 480x640, the pixel count will be doubled. In order to retain the same (or close to the same) power consumption, either decrease the actual screen size, like the My Touch Pro; or with better display technology like the AM-OLED on the Nexus.