Over time, I think smartphones will do well as controllers because they are... smart. The true smartphone controller isn't a static set of 4 lettered buttons and a directional pad, it is a dynamic, themed controller that changes based on the type of game you're playing and what is happening in it, even incorporating part of the game into the controller itself.
Purists might tell you that the xbox controller is a HORRIBLE way to control a first person shooter compared to the mouse and keyboard setup on a PC. Didn't really stop Halo or Call of Duty, did it? Now imagine the ideal smartphone controller - cheaper than current offerings, customizable, dynamic. I can see it working.