A portable keychain-sized device able to run a Bitcoin client? Interesting.
But I will redescribe here another type of bitcoin wallet which I have talked about in the past, that would have a better form factor:
Bitcoins could be stored on a smartcard having a flexible e-paper display, flexible built-in keypad, and flexible LiPo battery . Withdrawing coins from the card could require a user typing in an amount and a pin code, and then using a smartphone to scan a QR code shown on the e-paper display (or sliding the card in the merchant's payment terminal, which would scan the QR code). The QR code would represent a signed Bitcoin transaction to a pre-programmed address whose private key sits on some online server, which is only used as an intermediary step before forwarding the coins to the final merchant. The smartcard would effectively never connect to an online device during its entire life, making it un-hackable without having physical access to it. Smartcards could also be manufactured in pairs, or triplets, etc, to have clones of them in order to have redundant backups of the Bitcoins in case of a loss of one of the cards.
One might ask how the smartcard can sign transactions without access to the current blockchain. Well it is mathematically possible, because a transaction just consists of ECC-signing a few bytes representing the destination addresses.
 The technology for this already exists. I own one of those Paypal cards: http://gallery.drfaulken.com/d/8752-1/IMG_1466.JPG