Well, the crop factor issue wouldn't disapear...the size of the sensor, in relation to the image circle of the lens, would still be something to consider. But I can't argue that it wouldn't make sense to use a round sensor. After all, the image circle is always going to be round so why waste it?
But on the other hand, image quality is almost always significany better in the centre than on the edges. So when a square frame/ sensor crops the edges of the circle, you raise the percentage of high quality pixels in the image. Round sensor images might look terrible at the edges. Plus, people will still want square prints/frames to look at.
Now. If the could make a concave sensor, so that the light from the lens didn't have to hit the sensor at an angle, that would probably make for great images (with no chromatic aboration). But the sensor would probalby only work for a specifc focal length/lens. So what we really need, is a sensor that is flexable and can change it's shape (concavity) to suit the focal length of choice.
Just remember that this was my idea.