Usage of SMS and chat on mobile phones is growing by leaps and bounds, but there’s nothing quite as painful as trying to type out a long message on a keypad or touch interface. Swype is the one company I’ve seen that might be able to change that.

The basic idea of Swype is using a touchpad to quickly link together letters on a displayed keyboard. So if you want to spell “VentureBeat”, for example, you just trace your style tip back from V to e, to n, to t, and so forth. The technology also works using your fingertip.

Swype’s magic lies in how smoothly it works. The software has its own dictionary, so it auto-corrects for mistakes and variations in style. The tracing technique looks smooth and graceful, like a return to cursive-style writing. It looks like something that should have always existed.

But the most important detail is the speed. Swype’s founder said onstage that new users can reach 40 words per minute within a couple of days, and before long hit 50wpm. That’s as fast as many people type. Any application that can make messaging that easy could make mobile messaging tolerable.

As it stands, Swype doesn’t look like it has any real competitors (although ShapeWriter, for the iPhone, did come up). But there are other possibilities for fast text entry – one of last year’s presenters at TechCrunch40, Yap, does speech-to-text for mobile, which is ideal for some situations if it works. And there’s also handwriting recognition on touch screens, although researchers have spent years fighting that problem without finding a great solution.