The benefit of the current system is the network effect: Any phone, no matter if it's 50 years old or an iPhone 3GS, can dial any other such phone. In the entire world. Of course new technology can make that work in a smarter way (not that I'll take advice on "smart" from someone who thinks not capitalising sentences serves a purpose), but not without breaking backwards compatibility, which would severely limit the utility of such a switch.

Anyway, it's done. It's in SIP, it's in Skype, any cellphone has a phonebook build in, and most smartphones can dial directly from a Facebook friend-listing. I can dial 411 and be connected to anyone by name in a matter of seconds.