One of the other scenarios that Gamespy reported on had the long thin controller in one hand and an ergonomic, hand-molded button device in the other.
Jarne, I read that Economist article too, and found it fascinating. For all the hullabaloo about how fast & spacious the XBox was, Microsoft ended up with less than half the market share that Sony got, and lost money. There is plenty of evidence that bigger + fast does not equal better.
Also keep in mind that the GameCube was generally considered a failure, had the least appeal of all of that generation's devices for third party developer, and still allowed Nintendo to turn the greatest profits. The moneymakers were games that Nintendo developed itself. There is no apparent reason why Nintendo could make the Revolution a success on the basis of games it developed for its own device.
One of the demo games that Gamespy was privy too was a bass-fishing demo where twisting the controller twisted the fishing rod. Someone has already mentioned sword-fighting. What about a Harry Potter license where the controller is the wand? Think that will sell? Huh? Specially if they combine it with a multiplayer system as seamless as XBox's Live?
And as for holding a controller becoming uncomfortable -- Americans spend an average of around 5 hours a day (give or take) in front of the tube -- and since most people are flipping the channel pretty consistently, we can imagine that most people have the remote in hand for much of that period. We can imagine that the Revolution controller will be far more ergonomic than that.
So, with the industry in a state of uproar, and dozens of well known developers babbling all over the net about potential this and potential that, I think that at the very least it makes sense to reverse judgment. I see no way that you can predict to a certainty that this will crash and burn -- especially after what happened with the DS. Remember when people were saying that Sega's handheld would bury the Gameboy, because it had color & a larger screen. Yeah . . . well -- didn't quite work out that way.
<-- not a Nintendo fanboy, owns a PS2 for Katamari goodness