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It doesn't autocorrect a lot of things, it corrects "common" errors (type in teh in Messaging and it will switch to "the", it has (unfortunately) auto(in)corrected me a few times. So, it is not a case of it not working... but the dictionary is probably too small with not enough common errors.
Well, like what the iphone does, its nice... it can tell pretty much whether you accidentally hit the key to the right/left/up/down if the word doesn't make sense, and then correct it to a word that does, given the typo.
I am not sure you are making your case here (at least not to me). I have pretty much asked any of my iPhone toting friends to stop texting me, because the incoherent babble that comes across because the iPhone *thinks* it knows what you want. Personally I like having less "auto" and just having the suggestions. But that could just be me.
i find the auto correction adds ( ' ) on words that need it and minor fixes. It also capitalizes 'i' when a lower case is used. Simple stuff but useful