While you are typing with the onscreen keyboard, just above the letters a bar shows up with suggestions. Just look and when you see the word tap the one you want and it will place it in the text box, as well as add a space behind the word you just typed and the bar brings up punctuation options, or just continue typing. Automatically cappitalizing "i" is in there as well, just hit the space bar after typing. Now all this is in the on screen keyboard, not the slide out. I guess they figgured that if you were going to use the physical keyboard you would want one that works like the one on your PC. This doesn't work in the search bar on the browser though, I guess so you can google "kdsa;au" and see what comes up.
Course I haven't been stock in a long time so this might be particular to Handcent, but I'm pretty sure it was there in froyo.
Ok now I have to google that just to see.