I'm with you on that. Although, I do enjoy them in the arcade, like the old Street Fighter Alpha, or Marvel vs. Capcom (that was my fav.).
I haven't spent a tonne of time with Smash Bros. but when I have played it, I found it extremely busy and confusing, requiring the player to shift focus a little too often. I can certainly see how it would be fun if I got more used to it, but I don't have the interest to try.
re: controller, I thought they weren't using the Wii-mote, I thought they were using the classic controller (the one that looks like a SNES controller with analogue sticks).