A better approach?
1. Mandate that new cars be fitted with three ultra low-power radio emitters, one in each 'A' pillar, plus one at the top-center of the rear screen. These broadcast a timing signal, emitter ID, and a device ID (the latter to allow any leakage from neighbouring cars to be filtered). The emitters are active whenever the engine is running.
2. Mandate that new phones are able to detect the above signals. Upon detection, the phone must use them to triangulate its position within the cabin. If in the driver zone, the phone must completely deactivate all keypad operations and switch to a strict handsfree mode only.
Is it a complete solution? No. Obvious limitations are that it would only affect new cars \ phones, and there is nothing to stop the most determined of douchebags out there from operating the phone at arms length, within a different zone.
As others have noted, it would be much better to just enforce existing laws more rigourously. But if the politcos are determined to bring tech to the party, this strikes me as a better way.
Sidenote: It has been suggested, here and elsewhere, that handsfree kit does not lessen the danger. Could someone please explain to me why a conversation held over handsfree is any more dangerous than one held with a passenger? In both cases, the driver is (or certainly should be) processing auditory cues only, so what gives?