2009 Predictions: iPhone Gaming Will Replace Nintendo and Sony
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I think the DS would be more likely to be successful adding calling features (like the PSP has with full-on Skype support) than an iPhone would be adding real tactile gaming controls and becoming a legitimate platform.
I get it - I get it - people want the iPhone to be the magical "one device". But I'll tell you what - Nintendo has never lost a handheld generation (Lynx, Game Gear, and PSP to date) and they don't look like they're going to any time soon.
The biggest factor for me is the games, though, and only a Nintendo platform will ever have Nintendo games (industry trolls that keep calling for Nintendo to become a third-party developer notwithstanding). Nintendo is definitely one of the top game development houses out there, and Apple doesn't really have anything that can compete. Nintendo understands games, Apple does not.
I don't think the iPhone could ever dethrone the PSP or NDS, but I think if one already owned an iPhone that they'd probably ignore the other gaming devices unless there was a specific game one wanted to play. I fall into that category (as well as the significant other who likes to steal my phone), and I definitely haven't looked twice at any gaming specific devices because I can get everything I want on my phone most of the time. I only pack the NDS on trips involving kids I don't trust with my iPhone :)
Wishful thinking at its finest. I get that iphones are popular, they're just not _that_ popular.