Display/Input for hand-held device...

I'm working on building a device with the Ardunio which will be very similar to the Yamaha Tenori-On. The tenori-on is a music synthesizer with a large grid of buttons and LED's on it which allow you to use it as a step sequencer. Obviously audio synthesis is outside the capabilities of the Arduino, but sending MIDI messages is not.

What I'm trying to figure out though, is the best interface to use. I had originally wanted to use an array of LED's with a resistive touchscreen over it, but seeing as how I need at least 16x12 steps on display, the sheer number of LED's and chips needed to drive and control that many would be exceedingly impractical.

The next obvious option is the liquidware Touchshield, which would be excellent, except that I'm afraid it might be too small to easily and accurately touch that many elements on the screen that small.

Ideally I would love to find a large but low-resolution (16x16 even would be plenty) LCD panel that I can put a touch sensor over, but I've not had any luck finding something like that yet.

Anyone have any ideas? have any of you seen any hardware that might fit the bill?

if you have a bit of money, look at the oled touch shield. small, but looks pretty accurate.