In the good ol' United States of America, the receiver pays the SMS bill. In Canada, Australia, Europe and I believe much of Asia, the sender pays. For Twitter , this may add up fast.
This brings to mind something I heard on last week's TWIT - Jason Calacanis called in, and mentioned an enormous bill for text messages (it was over $200 in the space of a week, I think). Now translate that to the bills arriving at Twitter headquarters for all the SMS notifications they get from people (and possibly the ones they send, if they support international SMS). Either way, that's a lot of money bleeding out.
The only business model I can spot for Twitter is "get bought by Google/Yahoo/Microsoft".