I'm not sure dust was ever really a problem for most people. Although, for those in sandy/dusty environments (deserts, some industrial situations, etc) I bet it was a problem.
More to the point, though: I don't think it has to be an either/or choice. Casio makes a crapload of 200M water-resistant watches that sell for $50 or less. This includes both plastic (G-Shock, mostly) and full-metal models (MDV-106/107). The secret is (gasp)... a frigging thin rubber gasket. I frankly don't see any reason why we can't have this level of water resistance in a phone.
We would have to sacrifice thinness and lightness, but not by much. I think a lot of people would happily make that trade.
Similar thing with dust. Even though a lot of my phones in my teenage years lasted under a year, they always died with dust in their screens. Camping and riding bikes around dirt trails and what not can push a lot of gunk in those things.
I'm happy phones are a lot better sealed. It's a bit of a pain making it harder to swap the battery, but paying a shop $50 parts included to swap it and keep it sealed well is worth it to me. A replacement battery back then would have been like >$30 anyways, going by inflation that's not too much increase in cost.
On a larger object, this level of precision is harder to maintain. Due to spacing between fasteners or other flexing/distortion of the body, the gasket could be overly compressed in some places and loose in others...