What i think they meant was that handheld console gaming is dying mobile/tablet gaming is taking that audience. People no longer think they need a console to play games on the move. Look at games like this http://www.youtube.com/watch?v=2YRYMh3ShzA and even this http://www.youtube.com/watch?v=zaPzvpK3T8s
Those are playing on mobile phones and are better looking then the games on 3DS. Mobile gaming has caught up with handheld gaming.
These games look barely playable. Also, by now it should be established that it isn't about how games look, so better looking games on smartphones aren't a threat for a dedicated gaming handheld.
People said the exact same-thing when the Wii came out. They said the same-thing about smartphones not taking off as they didn't have buttons, they said the same-thing about Kinect which went on to be the fastest selling enertainment device in history.
Point being while you might not like it the casual audience does. And sadly it is that audience that has defined this generation. But more importantly is shaping the future of gaming. Look at things like Angry Birds. That game has been sold over 350m times. Did those people need a handheld console to play that? No. As you say it isn't about looks, graphics mean nothing. But when a phone can do exactly the same as a console and more why would the people choose the console?
For you or I we would choose the console because we are hardcore gamers who prefer physical controls. But we are now the vast minority. Sales of smartphones/tablets/touchscreen monitors/sensor technology etc proove that.
Phones have the ability to change things yearly such as the processor etc where as consoles don't. Look at the Google Nexus Galaxy. It has an HD screen and super fast processor. The speed at which these things are upgraded makes handhelds look out of date fast. Last year you could play GTA3 on your phone, whats to say next year you wouldn't be able to play GTA4?
So i think saying they are not a threat is quite laughable when you see sales of them destroy consoles. Iphone 4s sold over 17m in under 3 months. Samsung Galaxy s2 sold even more then that. Companies have worked out gaming on phones is a potential bigger industry. You might not like it, i deffinatly don't like it. But burrying your head in the sand and trying to pretend it isn't as big as it is won't make it go away.