If you make your own controller setup, you can get joysticks that will lock in either 4 or 8 way positions. I have no problems with an 8 way, but your movements have to be more precise. Daphne works great with mGalaxy. I've also played the pc version of Dragons Lair and that's good also.
The Mag-stick plus ball top even lets you switch between 4/8 way without taking apart the controller to switch it...