Jerry Kieffer on the NAWCC watch repair forum is a great proponent of the Sherline cross slide lathe. He often debates the suitability of the Sherline for making watch components with people who prefer WW style lathes. The result seems to be that the Sherline would do just fine, if the proper techniques are used. The Sherline can also accept 8mm WW style collets, and a tool rest, so you could certainly freehand on it if you wanted too.
I have yet to pull the trigger on a lathe, but a Sherline is currently at the top of my list. Ideally I'd have three lathes, ww style, Sherline, and something a bit bigger for case work and that would be beefy enough for "spinning" type work. But, I'm dreaming. I'll be lucky if I can afford a nice new set of screwdrivers as my next purchase.