The best method for text entry that I found for my Droid X is TouchPal. I used to use this for Windows Mobile back in the day and this was almost a deal breaker for me getting an Android phone. Luckily it was indeed available. I can type as fast or faster using this than I can on a regular computer keyboard.
One of the other users here pointed out that it requires an internet connection and a warning pops up upon installation that says your input might not be secure.
The manufacturer says this input method connects to the internet only to update the text prediction dictionary. I love this keyboard, but I don't input sensitive passwords with this entry method... because I'm a little paranoid. I know that sounds scary to some, and myself as well, but it is a good enough keyboard that I use it as my primary and thought I would share this, apparently, little-known keyboard with everyone else.
Give me your thoughts. Let me know if any of you appreciate this thread.
Here is a youtube link of me using it on my DX.