Smart Phones are winning
Cheaper devices get more powerful CPUs all of the time thanks to Moore's Law and thus are able to run more complex apps and operating systems. Cheapest Android devices are already now selling as cheap as some of the Asha phones. The other thing is the assumption of smart phones actually being better than feature phones. Obviously, successful smart phone operating systems offer more features and provide access to app ecosystems. Trends are showing that transition from feature phones to smart phones is happening. Smart phone market is booming and feature market is stable or in slight decline.
Opportunities for feature phones
Despite all of this things, I'm still not so sure about the inevitable decline of feature phones. I've got a feeling that there are a lot of people that just want a phone so that they can call or send text messages. These people are poorly serviced by our current crop of smart phone operating systems. Having all the functionality of smart phone makes the OS more complex and usability of main features is not on par with with feature phones. Also many would prefer a real keypad.
I'd also argue that most people are not really interested in apps as long as the phone includes support for the most important services and has few games. These people have a bit more complex needs than users that just want SMS and calls, but I do think that well made feature phone could also cater for a big part of this crowd as long as service integration and usability are good.
Nokia's S40 has definitely gone to right direction to offer a call, text centric devices with smarter and smarter features. If it is being developed into right direction and core benefits (like simplicity, affordability, durability, battery life) are kept in good shape, there should be a big market for it for a long time.
Maybe there is still room for revolution?
I still think that one could revolutionize the whole low-end market by coming out with completely new phone feature centric UI that is built using modern technologies but still targeted at people that find smart phones too complex and unnecessarily feature packed.