I just type as normal (and I have pretty fat fingers), the software does the rest. I was worried before I got the phone that the screen-based keyboard would be difficult but it does a brilliant job. I reckon I'm faster on the Desire than I was on my Nokia's T9 keyboard (and I was rapid on that!).
My only tip is to not look at what you're typing until the suggestions come-up and then hit the space (or the one you want if different).
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