Layout Issues

After some discussions with the (newly hired) programmer, I'm start to think about some of the additional design elements that still need to be completed.  He suggested some add-ons that I thought would be good, but there's a primary problem we have to address before I get him to begin work.  I'll highlight it in a simple picture:

My main problem is this:  the text area is going to be too small.  I know this will look amazing on the iPad, but I'm building a fantasy-based text-heavy game....I need the story scenes to make sense visually an the iPhone (or any phone for that matter) as well.  This story scene layout I've devised is typical of all videogames.  For example here:

But the problem that I face is that I'm dealing with a screen that's about the size of two sticks of gum wide.  Which is really tough if you want to put down a lot of lines of text and dialogue.  (Which I do, thanks.)  Console games have wide screens, which work really well for text boxes like this.  Text boxes on phones usually have a total of three words in them.

There is an alternate solution (and you'll note that I use Fire Emblem screens here because I think they do a great job of story-telling in a niche genre.):

As I see it, I have very few options.  The text could be below, in the middle, or at the bottom of the screen.  But what I don't want to do it take up the whole screen with text.  This is a graphical fantasy adventure game, and I want to keep it that way (Besides, I've invested way too much time into this art for me to take it all away). 

The programmer thought up a great idea, that I'm still playing with...we could potentially do scrolling images and text, very flipboard-like.  I don't want to turn it into a comic if I can help it, but it seems like a good idea.  Potentially worth exploring.  I'm going to have to explore my options as I dive into some code and as the coder and I make some prototypes. (And by 'we' I mean 'him,' naturally.)  But hopefully by the end of this I'll have a much better solution to the problem of creating text-based games for the phone.