Everyone here is speaking the truth in regards to [bold]console gaming. Just because the arcades have been using an excellent form of analog for decades the console market was using the analog joystick poorly. When Nintendo started using the D-pad with the NES it provided more accurate controls for thetypes of games that were being played on the system. (2-d Shooters, Platformers, Button Mashing brawlers). The D-pad was just far superior for 2-D gaming and became the industry standard for the entire 2-D era.
16-bit comes along and more inputs become necessary because of the new types of games coming to the console market (Fighting, Racing, Sports). All of these types of games gained enormous popularity and required more than just 2 buttons to play. Thus Nintendo came up with the Diamond configuration and the shoulder buttons for their SNES controller. This configuration demonstrated supreme egronomics for the fastest input and became the industry standard that still holds up today in one form or another.
PS1/64, Sony innovates with CD and 3-D graphics but continues to use the D-pad for all their games. This resulted in tank like controls for many 3-D or isometric games. Nintendo knew that current inputs were inferior and innovation once again came about because of the type of games being played; FPS, 3-D adventure, and 3-D Racing all needed faster movement in 3-D space something only an anolg joystick could provide. Nintendo also came up with an add on pack that allows for rumble vibrations in the controller. It was ridiculed as gimmicky at the time because it "didn't add anything to gaming", but once people tried it out they thought it was neat. Both these innovations became industry standards in controller technology.
Last Gen- Nothing changes dramatically other than a vast improvement in graphics and game size. Nintendo creates a wireless controller for its system that is superior in every way to previous attempts at wireless. Wireless becomes the industry standard (I don't think Nintendo necessarily caused this to happen though I think it just happened in the same way cell phones or wireless internet became popular it was just so damn convenient)
Current Gen- Nintendo sees a shrinking market and growing disinterest and recycled play mechanics. They realize that the market needs to expand and the only way to do it is to change the way games are played. They first create the DS with its touch and standard screens. This allows traditional games to be played on the hand held as well as allowing for a completely new gaming experience that is highly intuitive and addictive which they hope will draw a new demographic to gaming. Next they create the Wii with its motion controls and IR pointer. The amount of inputs available still allows for traditional game and is some cases (if done right ) allows for superior, simpler, or more enjoyable control over analog (FPS, Sports, Puzzle, Point & Click Strategy, simulation, party games ect.). The controls are ridiculed as gimicky and the system labled a fad.
Prediction for next gen- Motion controls and IR sensors become industry standard.