A phone you can use one handed, it's what made the iPhone awesome. Takes two hands to use a watch. I believe the greater evil is the watch.
If you're just looking at a notification, it takes zero hands, so your hands are on the wheel. If you try to interact with the watch, it would probably take two hands as you say, which makes it very difficult if not impossible to do while driving. Both scenarios make the watch safer to use than a phone.