Daring Fireball:

The analogy that comes to mind is to the keyboard on the original Macintosh, which had no arrow keys. The most commonly cited reason for this omission was that Apple wanted to force users to use the mouse, and not allow them to fall back on keyboard-centric habits forged on pre-Mac computers. But another reason was to force developers — including themselves — to design a system and apps that could be accessed entirely by mouse. Pre-Macintosh, how did you move up and down in a list? With arrow keys. How did you move the insertion point in a text editor? With arrow keys. By not even having arrow keys, there was no option but to design software meant to be used with a mouse. […]

By giving users and developers only a mouse for movement, it forced them to learn the Mac way. The lack of cut/copy/paste on the iPhone likewise forces users, along with Apple’s iPhone development team, to do things the iPhone way, rather than the Mac way.

By the way, the point about the original Mac is an interesting reminder just as Apple released the new BlueTooth keyboard — Steve Jobs is indeed a keyphobe. Wanna bet that he uses the new wireless model on his personal iMac?