David,
There is not one perfect way of laying out an on-screen keyboard of course: It all depends on the individual user's needs and preferences in terms of selection/control method etc. A comprehensive OSK AT solution must in the end offer a set of sample layouts for different needs (such as layouts for direct selection via mouse, head pointing, eye-gaze etc., for switch input scanning layouts, etc.) plus good tools for individual tailoring.
Until then: On the linked png image below you can see an example of a possible layout combining a qwerty layout + word prediction + phrase prediction. (It's a sample layout taken from the Tobii Communicatior 4 package.)
http://www.symbolnet.org/communicator_phrases.png
