SMS Popup application for the Android mobile OS intercepts incoming text messages and displays them in a popup window (activity). The popup window shows the contact the message came from and their contact photo (if there's one) as well as the content of the message. Directly from the popup the user is given the option to Close the popup (marking the message read) or Reply to the message (using a system intent).
The latest SMS Popup also have a full notifications system built in - this allows a user to disable the built in messaging app notifications and use those from SMS Popup. The notifications system has additional options such as custom vibrate pattern, custom LED color and the ability to remind the user of a missed message in case they missed the notification the first time it played.
You can find SMS Popup in the Android Market or just scan the QR code below: