Gestures do navigate: page up, page down etc. It would make life much easier.

That sounds like a really nice idea. Do you have any specific gestures in mind for some of those actions? (maybe two finger up for page up or something like that)

I am not sure how much control you have over the multitouch interface... If you have "absolute" control it would be nice to have something like: 2 fingers right, word right; 2 fingers left word left; 3 fingers right end on line, 3 fingers left, beginning of line, 3 fingers down, page down, 3 fingers up page up; 4 fingers down end of file, 4 fingers up beginning of file... I think those would not "conflict" with any of the existing gestures and would make editing and navigating trough code much faster. Novice user would not even notice that the gestures are there and "heavier" users can navigate better.

Yeah, I have that kind of control.

I thought about using 2 fingers left and right to move the cursor one character instead of one word. This could be a replacement for the cursor keys found on a normal keyboard. You can move to a word boundary rather fast by just tapping on a word.

I'll try out some variations, but that's a great starting point!

A problem could be the new 4 and 5-finger multitasking gestures Apple is trying out in the iOS 4.3 beta...

IMHO the right and left to move the cursor would need to be in the keyboard itself. Gestures are great but they are much slower than using a key, even in the capacitive keyboard. You could use just the 3 fingers for the other functions... 3 fingers, right word right, left word left, up page up, down page down. That would cover most of the essential navigation functions. 4 fingers would not be essential at all, they would be just a luxury :-) There is a app called writer that does a nice keyboard implementation where they have the cursor control on the keyboard, maybe it is worth to take a look at it, I can write pretty fast with it.

may be try add PgUp/Down, Home/End to Cursor-block buttons?

I tried to implement this but there were some problems:

The gestures interfered with scrolling and zooming: if you just slightly changed the distance of your fingers, the scroll view would interpret the gesture as a pinch-to-zoom-gesture. You also had to place the fingers for swipe gestures on the screen at exactly the same time or it would be interpreted as scrolling.

So, I had to remove this feature again because it really wasn't usable. I also found those gestures to be quite slow compared to a tap on a button.

Actually I would prefer those on the keyboard, the only problem is that you loose some space there... But.... I think it is well worth it because navigating the code is something we always use a lot !

While page-up and page-down are not necessary with typical touchscreen interaction (the wonderful iOS scrolling takes care of it), they are definitely necessary for me when I use a bluetooth keyboard. I just got the new Adonit Writer for my iPad3 and Textastic seems to work great with it so far (Command+Z as undo works!!). I was just disappointed to find that Control+Up/Down and Command+Up/Down both the cursor to the beginning/end of the entire document. Could you make a quick update to address this? Preferably Control+Up = page-up and Control+Down = page-down.