Well, if you are going to have a physical keyboard then why not have it be touch sensitive? Some people prefer physical buttons that can be felt and provide individual haptic feedback when pressed, so they get a physical keyboard which they can also use for gestures. Seems like a pretty good idea.
When the last Palm Treo came out the resolution was 320 × 320 and The Dark Knight was in theaters. That is hardly recent memory. Go back to the 2003 era of blackberries and you have square screen resolutions as well. Go back further to their pagers and they had the same. Lots of early displays had square screens. The point is all high resolution modern smartphones do not.
The square screen isn't the only innovation, the keyboard is also touch sensitive (ie, you pass your fingers over the keys without pressing down), allowing the use of gestures and scrolling through content without touching the screen and getting it dirty or obscuring the display with your fingers.