It would seem to be most practical to have front facing speakers (other then for calls). I can think of at least one model that has this, and I know the iphone has "bottom" facing speakers, but why don't most smartphones have front facing speakers? Is it a space limitation or is there a good functional reason to have primarily rear facing speakers?
The main reason is (probably) lack of space. The screens need to be as large as possible (due to the fashion in how smartphones are designed) thus leaving little or no space for speakers.
iPhones have their speakers underneath which in some cases is a good trade of, but when you hold your phone in landscape mode your palm will often cover the speaker.
I agree that it would be better to have the speaker aiming at the user when watching the screen, I guess that speakers that can be folded out would be a solution. How practical and sustainable it would be is another issue =)