Graffiti was very much a good hack for the time; when you consider how badly Apple screwed up with the handwriting recognition in the first Newton PDAs, it was a neat innovation to sidestep the problem.
I wouldn't like to return to it though; these days, I run Swype (http://www.swype.com/) on my Android phone, which I find to be incredibly quick and easy to enter text with.
Yup, I have fond memories of my USRobotics Palm Pilot 5000.
I think another reason Graffiti worked so well is that it's just plain easier to train a human to use an alphabet that's similar to their native alphabet than it is to do full blown handwriting recognition. In other words, it wasn't just that the graffiti gesture set was easier to recognize by software, but also that people could learn a gesture set that could "help" the software along.
I wouldn't like to return to it though; these days, I run Swype (http://www.swype.com/) on my Android phone, which I find to be incredibly quick and easy to enter text with.