Sounds like another big mess in the making: one only needs to reflect on the different TfL and NR policies on child fares, Over 60 cards, peak hours, day return fares, BOJ and refund conditions to see how this may well make things harder, not easier, for many passengers who really just want a simple, simple system that is the same everywhere. I sometimes try and describe the three different types of Oyster fare from London to Heathrow (that's before discounts, child fares and time restrictions) to incredulous visitors from eg the US and Canada, but they just look at me as though I have gone totally mad! I suppose only having two fares, albeit both cardboard, to Reading is some sort of improvement on this... although the presumably incompatible GWR ITSO system that is currently being added as an overlay may yet even things up!
Put more bluntly, we have to ask how it is that UK plc can spend £17.6bn on building a great new railway for its capital city yet also devise such a complicated customer proposition (which fundamentally stems from the inability of TfL and NR to harmonise their commercial and customer service policies) to it. Since we never really explain all the rules and typically leave them fumbling at ticket machines and gates trying to work it all out (particularly since TfL chopped the ticket offices and presumably will do so at manned ex GWR stations they take over,) it is hardly surprising that people that feel that the London region fares system is bit like a fruit machine set to offer its prizes only to insiders...
In my experience also, many non-UK visitors if they use contactless have no idea what their home bank will charge for currency conversion -- $2-3 per transaction in the US is sometimes mentioned -- so much prefer Oyster.
Surely 1st generation Oyster cards could be phased out over eg. a 12 month period with TfL offering eg. an enhanced deposit refund of say £5 to get people to empty their drawers of them. And also offer railcard discounts to pre-registered contactless cards. However, the contactless system is still not 100% reliable, with random IT banking failures that occasionally seem to block their use, so 2nd generation Oyster is really the best option.