and hardware innovation has stalled out. Because of course it has. They don't have the space of a dedicated camera.
You're totally not going to fit even a micro four thirds sensor in a phone, but there are a bunch of Chinese phones with larger sensors. Although they can be a PITA to find if you're on the US, reviews like them.
I suspect the reason why we don't see them from the mainline phone manufacturers comes down more to hardware BOM cost than packaging or size.
I went this route a year or so ago. Wait, that was three years ago now? I should have never checked.
I've owned a few smart watches over the years and got tired of things failing. Bands splitting (remember the Microsoft band?), batteries degrading, cases splitting due to swollen batteries, etc.
The only downside is that straight analog watches will drift some over long enough time periods, so you will occasionally need to adjust them by a minute or two.