SMS sucks and twitter proves it. When a well funded startup like Twitter which is full of smart people can't get SMS to scale, then something is wrong. And the something that is wrong is wait for it .... the carriers. The carriers control SMS which is why it sucks. If SMS were NEA it wouldn't suck but it is not so good-bye and good riddance.
SMS is dead. Maybe not today maybe not tomorrow but as soon as we have flat rate affordable mobile internet. The replacement will be something over good 'ole IP. Probably Jabber.