I've been thinking, would it be possible to use a smart phone in place of the wiimote or psmove controller? From what I understand, most phones now have the same motion capabilities of those devices, and it's something most people already have rather than needing to go out and buy more stuff.
Would anything like this be possible, or is there a reason it can't be?

We had already come up to this idea at the early stages of implementing hand tracking with motion controllers.
Doing this requires writing an accompanying app for major mobile platforms and testing on numerous devices, which is quite a bigger effort than supporting a couple of dedicated devices. Besides, there are some other thoughts to consider:

• Usually a person owns only a single smartphone, while there's a need for 2-3 (hands + head) motion sensors per actor. So you still need to buy additional motion controllers/phones or find them in your neighborhood.
• Smartphones (especially having reliable sensors) are still more expensive than motion controllers if you need to buy more.
• There is always a chance a phone attached to actor's body may fall off during action or take another damage (though protective cases may help). Motion controllers are specially designed for such tough conditions.

Of course, having this feature would help some users. But overall ratio of work investment to real value looks pretty low to get into it.