Well, not quite. If you look at the still-picture quality of the current crop of phones (>3.5 MPx), you would see that it would be comparable to that of the lower end digicams that were in the market about 3-5 years ago. I think it's a matter of time before we see phones that provide a reasonably good sound quality that could perhaps be connected to a home system without the sound quality causing one to wince. I can't imagine it not being worthwhile for any company to launch a product that would relieve the headache of carrying 2 devices with sufficient quality. Now, I don't think it would be a 'Wadia-killer', but my guess is that it would impress anyone looking for good sound quality and feature-set. The other possibility, though far more remote, is that a media player company with excellent products, like iAudio or i River, launch a player with excellent SQ with a decent communication feature-set.
Either way, if one such device is launched, I might even consider upgrading my 6-year old phone.