Paper. For the simple reason that lego can and are played without technology. That means children don't have to keep staring into a screen all day long whenever they are building lego, and also those areas where electronic devices and internet is not exactly a basic need can still enjoy with lego.
On a personal selfish note, I will still expect paper for A models minimum.
1) My workdesk is not where I play my lego (I play 'em anywhere where space constrains are not a concern), and the smartphone is too tiny to view instructions for long.
2) With paper instructions, I can take in the whole page in one glance. WIth the tiny smartphone screen, I need to swipe around all the time and can't take in the whole picture in a single glance.
3) Another point is I can also leave the page there, then come back later exactly where I left off. You can't do it on your smartphone. No worries about low on battery juice, or dangling USB charging cables.
4) Sometimes I tend to "fastforward" or "backtrack" around the instructions. For reasons like figuring out what it is suppose to look like, or fixing errors, or doing "live modifications", etc. It is faster and more efficient on a paper booklet.
And no, please don't ask me to buy a tablet. I have no use of tablets, lesser the reason on getting a tablet JUST to enjoy my lego.