Raked wingtips do work as well - by extending the span. Winglets are not the be-all and end-all (see 777-300ER or -200LR and 767-400). The main problem is that you can't go on extending the wing ad infinitum as then you hit gate compatibility problems. For a 737 or A320, the ramp space allows about 36 metres for the wingspan. Winglets allow you to effectively extend the wingspan - even though it isn't in line with the wing - without hitting the ramp space limitations.