Morten Hjerde has taken a long hard look at text input field design.
“Edit-in-place is preferable in most cases. A person can see the context, and the visuals is consistent. Full screen editing is preferable when the user is likely to enter a large amount of text. Predictive text (T9, etc) may only be available in full screen edit.”
Link: The anatomy of a text input field (sender11.typepad.com)
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