Talking while driving

Are you talking about holding the phone handset up to your ear or using some kind of hands free device??

Talking on a cell hands-free is probably safer since you won't ever be inclined to make eye contact with the person with whom you're speaking. However, even with a hands-free headset, at some point will have to take your eyes off the road to look at the phone in order to answer it, hang up, or dial.

Talking on a cell hands-free is probably safer since you won't ever be inclined to make eye contact with the person with whom you're speaking. However, even with a hands-free headset, at some point will have to take your eyes off the road to look at the phone in order to answer it, hang up, or dial.

Well sure - but I'm just speaking to general conversation.  Why are people so unaware of their surroundings while on the phone, but perfectly fine when talking to others in the car?  That is the question - nothing about the mechanics of dialing/answering.

Perhaps cell frequencies hinder mental processes.

My only thought is acoustics.  In the car you generally have both ears being fed signals, whereas on the phone its usually one ear with lower signal quality.

Could the extra concentration required to hear the conversation really affect awareness?

As compared to conversation with a passenger

The scientific literature is mixed on the dangers of talking on a cell phone versus those of talking with a passenger. The common conception is that passengers are able to better regulate conversation based on the perceived level of danger, therefore the risk is negligible. A study by a University of South Carolina psychology researcher featured in the journal, Experimental Psychology, found that planning to speak and speaking put far more demands on the brain’s resources than listening. Measurement of attention levels showed that subjects were four times more distracted while preparing to speak or speaking than when they were listening.[18] The Accident Research Unit at the University of Nottingham found that the number of utterances was usually higher for mobile calls when compared to blindfolded and non-blindfolded passengers across various driving conditions. The number of questions asked averaged slightly higher for mobile phone conversations, although results were not constant across road types and largely influenced by a large number of questions on the urban roads.[19] A 2004 University of Utah simulation study that compared passenger and cell-phone conversations concluded that the driver performs better when conversing with a passenger because the traffic and driving task become part of the conversation. Drivers holding conversations on cell phones were four times more likely to miss the highway exit than those with passengers, and drivers conversing with passengers showed no statistically significant difference from lone drivers in the simulator.[20] A study led by Andrew Parkes at the Transport Research Laboratory, also with a driving simulator, concluded that hands-free phone conversations impair driving performance more than other common in-vehicle distractions such as passenger conversations.[21]

In contrast, the University of Illinois meta-analysis concluded that passenger conversations were just as costly to driving performance as cell phone ones.[10] AAA ranks passengers as the third most reported cause of distraction-related accidents at 11 percent, compared to 1.5 percent for cellular telephones.[12] A simulation study funded by the American Transportation Research Board concluded that driving events that require urgent responses may be influenced by in-vehicle conversations, and that there is little practical evidence that passengers adjusted their conversations to changes in the traffic. It concluded that drivers' training should address the hazards of both mobile phone and passenger conversations.[22]