Think it's a joke? Over 1000 people found themselves in emergency rooms in 2008 because they were distracted while walking, says the article, which is twice the number from 2007, which itself was almost double the number from 2006 (and it's probably gotten higher in the last year). That's not to say that we need actual legislation to deal with this (although legislation has been discussed in New York, and there is already legislation on the books in many places against using your phone while driving), but it's something to keep in mind: I put my iPhone away whenever I cross a street, and just plain stop whenever I need to do anything more attention-deserving than switch a song or up the volume.
And it only took me one close call with a moving truck to figure that one out. If you're walking around with your iPhone or iPod in a busy urban environment, be careful out there.
Note: Clarified the statistics above; the 2008 number is approximately four times the 2006 number.