On one level it seems to be a way of getting noticed, of showing off your presence to co-travellers, to the people next to you in the train, the supermarket, the library or the street. The folks doing the talking might claim they value privacy and that they don't want no eavesdropping, but at the same time they do want to pose a bit, to look cool. Hauling up a cell phone in public space has become a way of claiming an extended private zone, the phone being treated like an extra limb, part of your body. The message is, like, "You're supposed to look at me, but you're not allowed to tap me on the shoulder or to tell me, even in a low voice, to quit the talking or ask me to step aside for the moment to let people through."
I'm really not okay with it - I can see the comical side sometimes but when you have two people walking very slowly in front of you, both talking in their cell phones, or talking closely between themselves while sms'ing or gaming, and becoming almost incommunicado, that's not fun. When people use their phones in the street they often change the way they move: they hunch over, they shut off contact with the outside that's around them in this spot, they move towards the centre of walkways or alleys and in doing so they block them for anyone coming up behind them or meeting them (because their gestures are still big and they tend to saunter from side to side in the middle of the path, so you can't get by safely without securing in a heavy-handed way that you've been noticed). In short, they'll create a bubble much thicker than you would need for carrying on conversation, and kind of clog up the flow of people.. And just don't get me started on people who spend lots of time talking handsfree, so that from just a few metres distance it's often impossible to know if their ears are plugged to the phone, and if they would hear you saying "excuse me!" or "hey there!" Someone put it that advanced cell phones makes us act less like citizens, less concerned with a public space or public outreach, and this seems too true sometimes.
Libraries, concert halls/arenas/theatres, movie theatres and schools should absolutely have a strict recommendation (sometimes a downright order) to have cell phones turned off. same for parts of trains,and for airplanes in general. I don't buy it that kids need to have their cell phones - or still worse, ipads - on all day in school, and someone whose phone starts cuckooing in a concert hall is disrupting the event everybody there has paid to come see.