Most image sensors are not square, they are 4:3 or 16:9. Square sensors are typically used for more specialty applications.
I agree it could be useful on a phone to have 1:1 sensors, but I would still support the direct recording to standard video resolutions and aspect ratios as otherwise encoder limitations will affect what video you can shoot.
I used to have the moto g stylus, it did that. I loved it's camera. Too bad I bricked it by trying to downgrade it to unnecessarily install a custom rom.