If you're into Inotia 2 make sure to check the forums: http://inotia2.gheroworld.com/index.php Personally I used Direct Touch in the beginning as it seemed much better. Later on I learned to use V-Pad for boss fights as it allowed more precise movement. Then I decided I'd learn V-Pad control no matter how hard it felt in the beginning. Now I'm using only V-Pad and can say it's much better.
Why do not think about an advanced direct touch system? Guess V-Pad gives more precise direction control, but i think iPhone is meant to have 'direct' touch controls. A V-Pad makes you sweat after sometime you hold your device in hand, and reduce the 'useable' background. Moreover, I've seen IMO on the iPad (http://global.com2us.com/blog/wp-trackback.php?p=902) and if you look at the screenshots you will agree the V-Pad is really a nonsense! Its too big and too distant to hold the device in hand and use it with two thumbs. Why do not think about an advanced direct touch system? Something like IndieAn Heavy Mach 2 (http://itunes.apple.com/it/app/heavy-mach-2/id350513027?mt=8)