I did a little mockup of the browser compared to the iPhone and tried to get the dimensions pretty close. This is where the physical keyboard and gesture area really come in handy. By allowing you to type you don't need the address bar at top and with the gesture area you don't need the back and forth buttons at the bottom. This is really encouraging as you effectively have MORE screen real estate for the important information.
UPDATE: Included the latest picture with iPhone address bar and without. When you first go to a web page the address bar is there until you scroll down.