Eventually, intricate mechanical clocks could be made small and light enough to wear on your wrist, and the era of the pocket watch ended. You didn't have to have a free hand to tell the time any more; all it took was a quick glance.
Today wristwatches appear to be declining, at least in my personal experience. Nearly everyone i know owns a mobile phone now. The digital clock on every phone makes a wristwatch unnecessary, so i see fewer and fewer people wearing them. However, replacing watches with phones also means we're back to the old habit of reaching into a pocket to check the time.
As phones and wireless earphones continue to get smaller, maybe it's time for a return to the old design, too. How about a phone, PDA, or music player designed in pocket watch form, shrunk to a circular face, kept in your pocket on a chain? Pull out your digital pocket watch to check the time in style; operate the phone, PDA, or music functions by touching the face, turning a knob, or rotating the dial. The circular dial affords lots of possibilities for new and elegant user interaction design, since a single dial can replace all the hour/minute or up/down buttons. To set an alarm, just turn the dial to the desired time and press it. Change the volume or select tracks using the dial like the wheel on an iPod. Flip through your phone book with a spin of the dial, then press a button to make the call.
Update: I think this belongs in the next James Bond movie. :)