Now, I'm all for not hurting kids. Hey, we have to make our stands ;). And, I really don't think it's a bad idea to make sure that smaller hands have smaller controllers. However, this isn't necessarily a job for the console makers. A lot of third-party manufacturers could pick up the slack and perhaps fill a niche market.
Nonetheless, I think the real problem is that Mr. Tomich's grandson had been playing video games for a year by age 4. Geez, by that pace he'll be playing "GTA" and "Manhunt" by age 7.
It always comes back to the parents. If they are involved and control how much a 3 year old plays games I don't see much of a problem. Plus, with kids now growing up in a tech age, surrounded by controllers, mice, keyboards, etc., parents should be on the lookout for such problems.
Career advice from Lunabean: become a hand surgeon.