Scenario: You're using iPod Touch or iPhone to type non-English messages, OR you like using SMS shortcuts (like "wer r u?") and you find the Autospell feature annoying.
Right now, there is no way to turn off Autospell, but there's a workaround.
Workaround: Use an International Keyboard.
Go to iPod/iPhone Settings > Keyboard > International Keyboards and turn on one of the other non-English keyboards (mine is set on Spanish). Then, when you use the virtual keyboard, you can switch to the Spanish keyboard, which will pretty much let you type whatever you wish to type. To switch to the Spanish keyboard, press the globe icon near 123 and the dot "." key.