Personally I'm glad they left it alone. I *love* the visuals and animation in Flashback/Another World. Normally I'm quite welcoming to graphical updates, such as the Final Fantasy/Gradius upgrades on PSP, but these games are just so stylish that I would fear them losing that individuality.
Touchscreen though? You'd have to be nuts. It was infuriating enough on a real device, but on an iToy...?