I hope it's true, I can think of a lot of good uses for a screen where the current keypad attachment goes (Whose functions this screen could handle without forcing you to buy an add-on accessory).
Inventory screens, a more detailed map that is available all the time, play selection screens in sports games, a rear view in racing games without having to hit a button to glance back, anything in a multiplayer game where you want some secrecy from the other players. Or Xbox Live functionality. You could handle things like typing a message to a friend, viewing messages, and such all through the controller without ever going through the dash when you're in a game.
And a personal favorite for a possibility, a proper console Intellivision collection. A touch screen is perfect for the keypad functions of an Intellivision controller (Which is why I loved that the DS got an Intellivision collection a couple of years back). Things like the PSOne Intellivision collection, Intellivision Lives on last generation consoles, the Intellivision games on 360's Game Room, and so on have always been crippled due to the necessity of bringing up an on-screen keypad, even in the middle of gameplay, anytime you needed to do something that you originally did on the Intellivision controller's keypad.
Now, you could just have a virtual keypad on your controller.