Oh the pain, after a day of moderate use and some installation of third party software from the market, this message appeared each time I tried to use the on screen keyboard.
The application Touch Input (process com.htc.android.htcime) has stopped unexpectedly. Please try again
Gah, again and again and again. Restarted, again, uninstalled the latest installed applications, again. Recalibrated, restarted. Same message, I was almost down to the same set of applications that the phone came with until I found
Settings > Applications > Manage applications > Touch Input > Clear data. That resolved the issue for me. Totally pointless blog post, but since I only managed to find one forum post with the same error, I thought it might be of some use to someone running into the same problem I did.