ALPS makes the hardware for the joysticks the major console companies use. They are cheap and work great -- except they have a really really short half-life. Even the Xbox Pro Controller (which is like $200) uses them which is crazy.

I'm guessing it makes financial sense to keep using them so nothing changes.

Hall effect joysticks are becoming more popular but they're usually harder to get ahold of and may not actually be that much better in the long run. Time will tell!