It is a reason that console games come with built in auto aim on all FPS shooters...
But come now, my original statement was hardly all that bold. Obviously the reason that gamepad aiming sucks is just that thumbstick aiming sucks. Replace the thumbstick, solve the problem. (And as a bonus, get analog movement as well as analog aiming--the traditional WASD doesn't allow for speed gradations.) I used to game exclusively with a trackball and never had any troubles. The only reason I stopped is that nobody makes trackballs for left-handers anymore that are any damn good. And if you don't believe me, I just gave you a couple of quotes from gaming professionals.
As for Starcraft, you're right, it wouldn't work; not because of the pointing device, but because a gamepad doesn't have enough buttons to manage all the hotkeys. In my original post, I called out FPSes specifically for that reason.
Someone did some tests a while back with a gamepad-trackball (trackball replacing the right thumbstick). They found that pro PC FPS gamers did just as well with it as with mouse+keyboard, after a short adjustment period.
Here's some quotes from the most recent attempt (out of three that I know of) to crowdfund one of those (http://www.kickstarter.com/projects/485185897/revolve-goes-w...):
"...I attained a level of accuracy I had never experienced without a mouse and keyboard combination." - Gerry Block, IGN
"You will spend less time fighting your controls and more time fighting bad guys." - Grant Collier, Co-Founder of Infinity Ward and Co-Creator of Call of Duty
Of course it failed anyway, because gamers all went "LOOKS DUMB LOL" and refused to read further. I was really hoping that Valve's controller would be a trackballpad; if it actually made it to market, I'm confident that ongoing positive reviews would lead to popular adoption.