For designers looking for single-layer touchscreen solutions, Atmel announced the maXTouch™ mXT112E in June 2011 which is optimized for screens up to 3.5 inches including features phones, digital cameras and personal navigation devices. The advanced noise processing algorithms, which make it immune to LCD noise, enable a true single-layer sensor. The following EE Times story provides more detail: http://www.eetimes.com/electronics-products/processors/4217365/Atmel-expands-maXTouch-E-Series-family-for-2-8-to-3-5-inch-touchscreens-
Cypress Semiconductors will be comming with many more shoking news due to its primary research are in PSOC with Mixed mode signal processing they have huge investment in development of touch screen and touch screen signal processing.
Many feature phones already have touchscreens, and the lines between feature phones and smartphones are already quite blurry.
This new controller may become popular for high end feature phones with modest size touchscreens (3 inches or more) or low end smartphones...if indeed those are actually two distinct product categories.
But many markets in the developing world still require a low cost feature phone, which for the near future, is not likely to have a touchscreen of any size.