- Menu: It's nice having a go-to place to find options or additional functions. With the iPhone, it's however the app author decided to design his software. With Android, hit menu, it's probably there.
- Search: Again, having a context-sensitive search button is a big win. It pulls up the URL Bar in the browser, the Search screen in the Market, and the voice commands on the home screen.
- Back: This is the really big win. Having a constant way to have the phone go back to wherever you were previously is huge, especially given Android's "intent" system. Twitter -> Browser -> Mail Client -> Incoming SMS, and to get back to Twitter I just hit the back button until I'm there.
I'm not sure I could even use an Android phone at this point that didn't have the hardware back button.
On my Xoom the Back, Home and Application List buttons are visible in every application (as is a search button in the menu bar)
The software "buttons" on a Gingerbread tablet are pretty much identical to the capacitive buttons on most Android phones, but they have the advantage of rotating with the tablet. Turn it any direction: sideways, upside down, etc. and all the buttons are still in the same relative location. It's nice actually.
For the record I can see Google's point but I agree with you. The irony of the Xoom is the ever present software buttons take up as much room as the hardware buttons do.