Well, as others have pointed out CarrierIQ themselves have advertised it as 'Able to capture screen transitions, button presses, and service interactions'. On a touch screen device being able to log where people touch the screen is the same thing as a key logger.
http://latimesblogs.latimes.com/technology/2011/12/carrier-iq-privacy.html
Last week, 25-year-old system administrator named Trevor Eckhart released a video (above) purporting to show Carrier IQ's app recording smartphone users' every keypress, and implying that the company was therefore able to intercept users' private communications.
But security researchers have disagreed with conclusions drawn from Eckhart's analysis.
"It's not true," said Dan Rosenberg, a senior consultant at Virtual Security Research, who said the video shows only diagnostic information and at no point provides evidence the data is stored or sent back to Carrier IQ.
"I've reverse engineered the software myself at a fairly good level of detail," Rosenberg said. "They're not recording keystroke information, they're using keystroke events as part of the application."
The difference is subtle but important. To perform commands, applications need to know which buttons a user has pushed: Your email app needs to know when you tap the reply button, and your phone app needs to know which numbers you press in order to dial. Applications therefore pay attention to which buttons a user is pressing.
But listening for a button press does not mean an application is therefore sending a record of those button presses back to the company, researchers said.
............
But Rosenberg said his look at the Carrier IQ program revealed "a complete absence of code" that would indicate key presses were being tracked and recorded or sent over the Internet by the phone.
Instead, the readouts on Eckhart's video that occur when he presses keys are "debugging messages" -- informational feedback meant to help smartphone programmers verify that their applications are working correctly. In this case, Carrier IQ's developers appear to have set up the program to display a diagnostic message when a key is pressed or when a text message is sent.
"It's just spitting debug messages to the internal Android log service," sad Jon Oberheide, a co-founder of Duo Security. "It appears that Carrier IQ is indeed collecting some metrics, but I have not seen any evidence that keystrokes, SMS messages or Web browsing session content are being transferred off the device."