According to the latest Compatibility Definition Document, the definition for screen configurations require that:
- Screens MUST be at least 2.5 inches in physical diagonal size
- Density MUST be at least 100 dpi
- The aspect ratio MUST be between 1.333 (4:3) and 1.779 (16:9)
- The display technology used consists of square pixels
In practical terms, the lowest screen resolution currently being used is QVGA (240×320). There are a couple of phones that use this resolution including the HTC Tattoo and Wildfire. The smallest device I’m aware of is the 2.55″ QVGA Sony Ericsson X10 Mini.