The screens of current smartphones certainly draw more power than the display of a digital watch, but I believe their relative importance in the overall power use is far behind that of other components that also evolved since then. Current smartphones don't last more than 2 days even when the screen is off. A watch or even and old Palm OS smartphone can't really compare with nowadays devices in terms of performance. The current OSes, applications or network speeds wouldn't be possible with the older technologies, and it really does change the use cases.

This is the progress that "we accepted" (it's not like we really had a choice though, otherwise TMO users would still have recent HWKB phones), but it came with trade-offs on the power draw. Marketing surely facilitated the transition but I'm sure it would have gone in the same direction even without brands renewing their flagship every year.