Thinking about the analog space issue, something that keeps popping into my head was a Genesis controller that had a circular well for the d-pad. Something like that that could track analog movement would definitely fit the form factor better. And if they threw enough R&D cash at it, maybe they could have a way that, controlled by the system (no user thought required, no switches or anything) it raises up a subtle d-pad shape behind the well for digital input games? It does this automatically for DS BC mode, and does it based on the request of the game for current 3DS software. You don't really press in the well, so the impression wouldn't have to move up or down far, be less prone to breaking that way.
It sounds strange the way I've written it out, but I think it would be sufficiently low-tech to pull off. Then again, I loved the clicky NGPC stick, so I have no qualms about seeing that return either.