First things first, fun game! I love a good game of Battleship.
I want to echo the above poster's suggestion of doing away with 1x1 ships... they're more or less luck, haha.
My other suggestion is to make the placing of ships a drag-n-drop action. It was kinda awkward using the D-pad to move around and place ships.
All in all, very well done! I will be advertising this to friends.