There are secure key-storage devices like Trezor or Bitsafe. Why there are no full client HW wallets?
Because you can use cheap Android smartphones for that. I have bought one for less then a price of Trezor. I'm using it as BTC wallet only.
smartphone could break
Dedicated HW wallet can break as well. All you need to do is backup the wallet, or save the seed.
possible malwhare
Malware is not an issue if you are using it as single purpose device. Do not install anything besides the wallet app. Do not even register your google account.
That is exactly what I was thinking however if we put a bit of money together we could build a much cheaper alternative because
1) no need for gprs/edge/3G
2) no need for full touch screen, a candy bar* design would be better since all you have to do is type numbers and click send.
3) no need for speakers or microphone.
If they are under 20 dollars each you would be able to buy one for whole your family and friends!
Why insisting on the wireless part ? Again, wireless pairing on arbitrary devices is not easy.
Your options :
NFC : cool, how many desktop computers support NFC ? how many smartphones support NFC right now ? And do you really want to keep both devices glued to each other while the transaction is performed ?
Wifi : ok, how do you enter the passphrase, how do you retrieve the device IP, how many desktop computers use Wifi too ?
Bluetooth : pairing is not trivial either.
Zigbee : not deployed.
USB : connect, no setup, done. If you get a device and a USB cable, I figure people will know what to do with it
just make a usb wireless dongle specially made to work with the hardware wallet. That will make it very easy for stores that want to accept bitcoin because all they will have to do is plug the dongle and start sharing internet.
*candy bar design is like dumb phone design.