... and they won't physically fix it.
Are you sure Nintendo are responsible for this decision?
As far as I can tell, Nintendo are the publishers, but Arika are the developers.
Arika are also fighting game developers (Fighting Layer EX for example), so they're probably very keen on input accuracy.
I don't see why this patch wouldn't have been Arika's own idea.
It's not just Nintendo. The whole industry just forgot how to make good d-pads.
I wholly disagree. Vita d-pad is too clicky and the DS d-pad was never good. The gaps are super uncomfortable after long plays, you cannot deny that. Try comparing these two d-pads to let's say the Saturn d-pad or the SNES d-pad. It's so inferior it's not even funny.
I think the gaps are part of what make it more comfortable for my thumb to move around from one input to another. That they're indented near the center also helps. And lastly, but perhaps most importantly, the position of the D-pad is very important.
Sony are well aware that the analog is used far more often than the D-pad, and that seems to be the reason why most (if not all) other controllers switched their position around. But that results in the d-pad being placed in a position where your thumb constantly has to be angled far inwards, on top of making precise inputs. This is not so much an issue with an analog because it protrudes further out from the controller, and you can make a "Right" input on the analog by positioning your finger at the edge of the left side, and tilting it inward.
That's not possible on a d-pad. Your finger has to be on the right side of the d-pad to make a right input.
So to me it seems they made a conscious decision to place the analog in a 'good' position, and the d-pad in a 'great' position.
While other controllers prioritize placing the analog in a 'great' position, and the d-pad in a 'not good' position.
I can't really use those non-gap d-pads (if they're shaped like a +) any more since they start giving me blisters after an hour or so. But for the ones that are saucer shaped, if they work properly, they feel the most gentle to me. Like this one: