This isn't going to be for phone sized things. it'll be more like the size of a direcTV dish but in a very different shape. The system design and technical requirements to have something that moves around and is handheld is very different than a fixed CPE that's aimed upwards.
For your second question, both are suitable, but in different markets. O3B is intended to replace high cost Ku and C-band transponder capacity for telecoms and ISPs that are in a place economically impossible to reach with PTP microwave or fiber. The smallest terrestrial o3b terminal is a pair of 1.8 meter motorized tracking antennas semi-permanently installed on concrete pads. O3B gives an ISP one big fat pipe back to the terrestrial internet in somewhere with good connectivity, and then that ISP can distribute service around their region using whatever technology they want to use, or have access to (PTP microwave, point to multipoint, fixed LTE, DOCIS3.0, various types of FTTH, etc).
o3b only functions at latitude +/-45. Starlink and similar systems will be in polar orbits, so with network architecture for satellite-to-satellite relay, there is the possibility of truly global coverage (as Iridium service works equally well at the north pole, in remote parts of Nunavut, at the south pole, in Tierra del Fuego, etc).
It will not be competitive in cities against terrestrial based infrastructure. Given advancements in how much data can be shoved through old copper (DOCSIS3/3.1, VDSL2 30a, g.fast) and various active ethernet FTTH and GPON FTTH, those will have much greater throughput. A dozen starlink satellites will have less aggregate data throughput than what it is possible to push down two strands of singlemode fiber.