I don't like it when IM clients tell people when I am typing. I dunno; it's like this tiny invasion of my privacy. One of the nice things about IM versus real conversations is that I can change things before I say them, or choose not to say them at all. When the other person's window says "Travis Spomer is typing..." as soon as I type the first letter, some of that is lost. It's actually probably not a big deal at all; I'm sure most people aren't as neurotic as I am.
In addition to the "person is typing" notifications, the business IM client I use at work also gives me a notice when someone I'm talking to closes the window. This gives me even more things to obsess over. Now I can't close my IM windows until you do, because I don't want to be the one who says "hey you're boring me, so I'm going to go do something else now." It may be true, but I don't want to say it, even so implicitly.
I tend to read a little bit too far into those kinds of notifications. If you start typing, then delete your message, and then start again, and then delete it again, and then do that once or twice more, I notice. I don't know what it means, but I notice it. Did you want to continue the conversation, but couldn't think of anything else to say? Are you nervous when talking to me? Is it my fault? Should I think of something else to say so we can continue our conversation? So many suffocating possibilities... I always overanalyze things like that.
I don't really want people to know when I'm typing for that reason. It's not a good reason. I just don't want to tip my hand like that. I like that little private aspect of IM conversations.