I think you just didn't notice people using them; they are not only limited to cell phones and credit cards, you can buy Suica / PASMO cards and load them with money. They can be read through a wallet or purse too. They are a godsend for trains; you can skip the crowed ticket vending machines, and go directly to the tracks. You wave your wallet / cell phone / purse over the blue IC reader on the turnstile and you're in. You ride to which ever station, go to the exit turnstile, wave it again, and it automatically deducts the appropriate amount. It makes dealing with transferring train lines so much easier to; just walk through the turnstiles you need. The paper tickets support some limited transferring, but you have to know exactly where you're going and how much it costs, and buy the combined amount of money for the station you want to end up in. If you make a mistake, you either throw away the ticket and the money or have to talk to a station master to pay the difference.
They were all over the place two years ago, but I noticed a sharp increase when I was in Tokyo two weeks ago. Every station on the Yamanote Line has added pink Suica / PASMO only turnstiles, something you learn to watch for after trying to use a paper ticket on them. It wasn't just Tokyo, either; Niigata, Kyoto, Oosaka, all of them had these at every turnstile, on vending machines, and at every convenience store I went to. They seem pretty dangerous, though; they're even faster and easier to use than a credit card. You think American's average debt is large now...