I've cut and pasted vector art from Illustrator to PhotoShop and chose "smart object" when I pasted it.
Is there a way to convert the smart object to a shape layer now so I can edit the very simple art directly in PhotoShop?
You can not convert a Smart Object to a Shape Layer.
The best option is to double-click the Smart Object and then copy it, jump back to Photoshop and paste it as a shape layer. Then delete the Smart Object if desired.