The original Atari joystick seems perfect to me. Other than adding more buttons, why did so many companies make awful controllers until the NES came around?
That's a loaded question, because the assumption behind it seems to be that they *intended* to make awful controllers. Obviously they didn't. They intended to improve on what came before, which is all anybody ever does. Otherwise there's no point even releasing a new system.
The Intellivision, ColecoVision and Atari 5200 all had keypad-based controllers with more than one fire button. That was supposed to allow for more complex games than the simple stuff that came before. The Intellivision controller, at least, was very good at that purpose, and *many* Intellivision games use the keypad extensively. A lot of Intellivision games just wouldn't be possible at all on the Atari 2600 without an external keypad adapter and a Y cable. (Not sure if there is such a thing, but maybe there could be.) Lots of games for all these systems use more than one fire button.
This is not different than what happens now, where there's often a clear trend in the industry that everyone follows because that trend allows for either some new gaming feature that everyone wants to have, or just more complex games. You saw this with the adoption of optical media, internal hard drives, dual analog sticks and shoulder buttons on gamepads, etc.
You can't expect the game industry to just be stagnant. It never has been. You can celebrate the good things about older systems, and maybe the 2600 stick is one of the things you like about it, but you can't really expect console manufacturers to copy and stick with that design forever. It was a design with huge limitations for the types of games you could play with it.