For me VATS is making the aiming more easy in some situations and makes you use it to see more eye-candied cinematic deaths. If you ask me nothing could be done better than VATS in an Oblivion style game.
If you have 3-4 enemies coming towards you, in the heat of the battle it is easier to...
I think you know that a lot of isometric style games are still being made as much as FPS`s. To give a perfect example: Diablo 3.
Now tell me; IF there was a fallout 3 with the diablo 3 engine with all the aspects of old fallout games do you still think that it would sell less?
Let us not...