Will the new Facebook iPhone application be the death of Twitter?
If Facebook offers a "communication utility" consistently, as part of their platform, it has way more users than Twitter and should be able to push it aside pretty quickly.
Twitter is interesting and sorta fun but it's annoying that I can't interact with it the way I want to--at least not consistently. Any limitation or change that forces people to change their behavior is a negative. SMS is bit annoying too in that you can't mass communicate, at least not for free.
As VentureBeat notes:
The "for free" part isn't so much a dig at Twitter, which also lets you message for free, but a dig at simple text messaging services (also known as SMS), that cost money to use.