I do this pretty often, and people pretty much always complain. Less so people my age (college-aged), but a lot of professors, TAs, and my parents all claim that it's entirely too creepy. My parents have actually told me that they'd prefer if I just looked at the screen the whole time.
But on the other hand, why would I look at what I'm typing? I already know what it says- I hardly have to read it again. A good typist knows when they've hit the wrong key and should be able to correct for it without having to read.
I wonder if college age folks are more likely to be okay with it or if they're less likely to say something about it? Probably some combination of the two, I'd guess
I usually type mostly looking at the screen and then glance up and make eye contact or nod during pauses, to re-establish that I know the person is there and I'm paying attention to them.
I don't think it's so much a practical thing as purely social. I don't think there's anything inherently wrong with looking at a person while you type. It just doesn't seem socially typical. It might be the normal thing to do at some point, in which case I'll adapt. It just doesn't seem to be the case now. It'd be interesting to do research on this, though ,and see if there's a significantly different perception between age groups.
I'd guess that most folks on this board are pretty proficient touch typists, and could look wherever they want while they're typing. Even if you're only reasonably good at touch typing, you're probably not going to mangle the words to the point where you can't run a spell check over it to fix most of your mistakes.
I'll personally probably stick to mostly looking at the screen for now, since it seems like more people are made uncomfortable by looking at them, than looking at the screen, but it's interesting to think about where it might go.
But on the other hand, why would I look at what I'm typing? I already know what it says- I hardly have to read it again. A good typist knows when they've hit the wrong key and should be able to correct for it without having to read.