A fingerprint reader is probably more secure, but actually wouldn't solve the "smudge" problem. You've most likely left latent prints all over your phone. These can be used pretty easily to create a fake finger that would probably fool the sensor.

Additionally, the history of swipe sensors in laptops is a mixed bag as far as this sort of solution goes. They are in almost all laptops, but almost no one actually uses them. Most people perceive them as too much of a hassle compared to the standard username/password setup. Maybe if phones start holding data that people value more (like digital money) they'd be willing put up with the additional work of using the sensor.

The ultimate solution would probably be something that grabs the biometric data without the user having to do anything special. This would make it easier to use and more secure. Apple actually already has a patent on this: http://www.engadget.com/2009/03/27/recent-apple-patent-filin...