After this thread I spent a lot more time looking into responsive design and have to say I'm kind of converted. It's certainly easier than creating two separate interfaces and it means that the mobile version tends to look much more like your normal site in terms of branding and colours/fonts, etc. (because it really is your normal site with tweaks). I've been working a lot with Foundation over the past couple of months, and it has some really cool stuff in there for handling different screen sizes as well as touch. This kind of removes a lot of the hardwork in creating a responsive interface purely using media queries.
We've been busy integrating the responsive web interface with our Kartris cart, and have a demo on v25demo.kartris.com.
Really glad I found this thread, it's nice to be right, but sometimes it's even better when you find out maybe you're wrong and you learn something and have your mind changed!