The guy is a complete dick. He's still living off the last Lions tour and hasn't had a decent match for Wales since that tour, in a nutshell he's the main reason the Welsh backline has struggled of late as his service from the base is so slow - by the time he's winded up his pass the opposition are lined up to hit whoever the reciever is.
On his day he can be a world beater and a nightmare for opposition back rows in defence as he's such a big powerful guy but he started to believe his own press a little too much and lived on past glories. His region the Ospreys lost patience with him some time ago and he hasn't started a game for them since the turn of the year, hence his move to France for the coming season.
As for his replacement for Wales, no-one stands out (which is the main reason Gatland persisted with him), we still have Dwayne Peel who is a shadow of the player he was 4/5 years ago but is still only in his late 20's and has a much better service. Apart from that a few young 9's with potential - Richie Rees, Tavis Knoyle, Rhys Webb and Lloyd Williams (who's been called into the squad to replace Phillips).
I can see Phillips coming back into the squad before the RWC though as Gatland has in the past let players back in (wrongly in my opinion) after previous incedents - Andy Powell and his infamous trip down the motorway on a golf buggy springs to mind.
I'd rather see a potentially weaker Wales side though and leave him at home.