SMS Popup
(Link) is an Android application that shows a pop-up screen each time you receive a new text message, regardless of what you're doing on your smartphone at the time. The pop-up contains the sender's picture (if there is any assigned, of course), the full contents of the message you've just received, and three customizable buttons underneath it that allow you to quickly type a reply (or choose from a list of preset ones), speak a reply, delete the message or close the pop-up (this action also marks the message as read by default, but can be set not to).
The most recent versions of the app also have a notification system built-in, so you can turn off notifications in the default Android SMS app altogether. This system lets you choose a custom vibration pattern, custom LED color, and you can also set it to remind you periodically about a notification that you haven't yet acknowledged.
You can find SMS Popup in the Android Market (it's the version by Adam K.). It's free, but there is a donation version available if you'd like to support the developer. Alternatively, you can download the latest version straight from the project's website and sideload it onto your smartphone.
