This is the problem with your thought process. Video games have changed. What you think they should be isn't what they are now. You don't continue, and grow as a company by targeting a shrinking demographic.
Don't forget who had utilized a touch screen for games properly.
I'm aware the DS/3DS/etc do more than games, but anyone that uses the DS browser and thinks it's good is a liar.
Granted they are exclusive to Nintendo hardware which given their current diminishing hardware market share will mean less exposure, but it's not as if kids today don't know who Mario/Link/Samus are, only difference is that they know Mario/Link/Samus from the Wii/DS/3DS games instead of NES/SNES/N64 games.
Again, I don't have hard data, but the situation doesn't seem as bad as some may think.