Mark this up as another reason why I love Android. I love the notifications on Android, I think it's the best system notification feature throughout all of smartphones, but that's not to say that it can't get better. One thing I would prefer on Android is that SMS messages come directly onto the screen instead of scrolling on the top bar of the notifications menu.
This is solved with SMS Popup, an app that just popped up (ha!) in the Android Market. Basically, when you receive a SMS a pop up bubble appears on the screen and allows you to either close or reply. iPhone users will recognize this option because it's pretty much exactly like the iPhone experience. If you have a photo icon for your buddy, it'll show up along with the SMS. I'm a huge fan of this method because now I can instantly read the SMS and decide whether or not to reply or close without sliding down the notification window. Sweet apps.
Go download SMS Popup in Android Market and see if you like it!