Software lag isn't unique to touchscreens. Software lag is always a terrible thing, and developers who de-prioritize performance should be ashamed, but that is true regardless of what input is used.
It's kinda bearable with buttons because you get feedback. The ATM I use isn't the speediest thing but the buttons have a very tactile feel and it beeps at you for every press. It might not be "impressive", but it does cause forty dollars to appear and that's really all I wanted from it.
Now ask anyone with a touch screen in their car what their error rate on that thing is. Even the really good ones are pretty bad.
Physical buttons allow for memorized action sequences, though. As long as the input layer has some kind of FIFO buffer, it doesn't really matter how much lag the actual application has. If "call home" is always just "button A, 3x button B, button C" it is absolutely trivial to repeat that without even looking at the screen.
Touchscreens don't work quite as well for this. Even if it allows for input queuing, you often still need the previous screen to finish drawing to have a frame-of-reference for your presses. Even the slightest delay turns into an annoyance, and when it involves some kind of drag-scrolling a 50ms delay already becomes unbearable.
A touch screen imposes additional lag, though. Detecting finger swipes for left/right, for example, requires more processing than spinning a fucking dial or pressing on a button. But, like you said, performance doesn't matter anymore to the companies that design these interfaces. We should have criminal laws for this type of thing along with the return to proper hardware interfaces. Lack of performance should be a criminal offense.
