The first choice is ugly and doesn't work with overhead lighting; the second choice is expensive and requires you to handle bare electrical wires. But now the crew at Switchmate have an ingenious third way that delivers the benefit of a switch replacement without the need to deal with wiring.
I first saw a prototype of the Switchmate back at CES. It's a block of plastic with a servo motor, a Bluetooth Low Energy radio, and a couple of magnets on the inside, and a simple button on the outside. Place the Switchmate over your existing light switch and the magnets secure it. Press the button and the motor moves the existing light switch's control mechanism to turn the light on and off (it works with both a traditional toggle switch as well as the fancier Decora/rocker switch).
More importantly, the Bluetooth LE radio inside the Switchmate makes it possible to control the switch from an app. Switchmate has developed a free app for the Android and iOS operating system that lets you control your lights from your phone or tablet. You can also set up schedules for your lights to turn on and off automatically, either as a burglar deterrent (delivering the impression that someone's home while you're away) or just to make sure certain lights are on when you typically come home from work.
Switchmate will also offer a Bluetooth hub that will enable you to control your lights from anywhere you have Internet access. The Switchmate is slim enough that multiples can be mounted side by side to control multi-gang switches. The one thing Switchmate won't do is dim your lights--it's an on/off solution. But the low cost and simple design make this smart-home solution appropriate for everyone, including renters who wouldn't want to alter the property or leave their controls behind when they move.
Switchmate kicked off a crowd-funding campaign on Indiegogo this morning, with a $50,000 goal, and will be selling its lighting controls at early-bird pricing of $39.95 each. That's a little more than the typical Z-Wave plug-in module, but those require a hub to operate. And it's cheaper than a Belkin We-Mo plug-in module. Bottom line: It's a very smart idea.