I think it would do better if they would have put VS. Super Mario Bros on it instead of regular Mario Bros though.
Then they would have had to use two different types of joysticks (4-way and 8-way). 
Super Mario Bros. only needs a 4-way. If it had ever been released as a dedicated arcade game it most likely would have come with a 4-way.
In fact, it only uses 3 directions (left, right, and down). If it wasn't for big Mario's ability to duck or go down pipes, it could use a 2-way, same as Mario Bros. used.Edit: Strike that, I forgot about climbing vines. SMB does use all 4 directions.
Since it was only ever released on "Jack of all trades" systems (NES and VS. system), it had an 8-way because those systems were made to be compatible with a variety of games, some of which required an 8-way.
If I had a VS. system set up for SMB, I would use a 4-way (same deal for any of the other 4-way VS. games such as Excitebike).