I will give credit to DS in that they were able to make "resistive-touch" screens a big success.  Previously PocketPC and similar devices had touch screens but they were never put to great use for games.

However the DS technology was superceded by smartphones (and Vita) with capacitative touch screens, which you can use smoothly with bare fingers and you can't give DS credit for that.

I think the DS/3DS are also part of a dying breed.  The DS sold amazingly because it could do these stylus based "study" games, like brain age and in Japan games to study Kanji writings and other things.  It was the perfect excuse for kids to ask their parents for a DS: "Kids: Mom, dad can I get a DS?  All my friends are getting them because they can practice wrintg and math and stuff.  Parent: For $130 it's a bargian compared to how much we're paying for their studies...".

However 3DS doesn't have that role anymore since it's been taken over by smart phones & tablets.  Just check and you'll see that there aren't anywhere near as many of those study games made for DS/3DS any more becuase people don't buy for that anymore.
For example checkout products from Rocket Company which made lots of study titles for DS:

http://www.rocketcompany.co.jp/products/index.html#3DS  (Google translate if you can't read it)

- 2006 KanKen DS (Kanji test study)
- 2007 Thomas the Tank Engine: English language math starting with the DS2
- 2007 EiKen DS (English test study)
- 2008 Rekishi DS (History study)
- 2008 Lose the fat forever (diet game, lol)
- 2009 KanKen DS 2 &3
- ... and then that's it, since 2009 they don't make any more study games

This is why I think 3DS will never have the success of DS.  Now handhelds primarily based on touch input are do0Omed if they can't match smartphone/tablet apps and performance. :)

When people say this, it's usually not so much about current sales, as industry issues.

As HD gaming keeps pushing ever upwards, game development costs have been spiraling out of control. Franchises that would have been released, sold a few hundred thousand copies, and made a profit for their developer and publisher are now not being made, because the cost to develop is too high compared with the number of copies it would sell.

As this occurs, publishers are growing increasingly risk-averse, because they're concerned about the possibility of flops resulting in their company crashing. This results in companies playing it "safer" by releasing games with feature sets that have already been tried and tested. The end result is that more and more games end up being almost carbon copies, and games in the less popular genres are being converted into the "more popular" genres in order to try to sell more copies. Hence recent Resident Evil, for instance. Hence online multiplayer being shoehorned into most games.

Meanwhile, other trends are also concerning - the growth of microtransactions, for instance. These are also a result of the aforementioned increase in development costs - knowing that gamers aren't likely to pay more than $60 or so for a new game, developers are having to push extra monetisation methods into games in order to recoup the cost, because otherwise, if they only sell 5 million copies of the game, they won't make a profit.

Gamers aren't likely to tolerate this pattern for too long, and what happens when gamers get fed up with all of this? They stop gaming, or at least they stop buying the AAA titles that the big publishers depend on for profits.

What Nintendo does is provide a different approach. They aren't rapidly ramping up the raw power, and thus the cost of development, and instead are focusing on trying to bring new people into gaming through innovative controls, etc. Whether they're successful at any one moment in time is somewhat irrelevant - what really matters is long-term effect on the industry. Consider that Nintendo brought out the Wii, and a few years later both MS and Sony released their own motion controls. Do you really think either company would have pushed their motion controls as anything more than a minor peripheral (not unlike EyeToy) if not for Nintendo? It's Nintendo's influence, whether leading or not, that is keeping the industry from stagnating in the ways that matter.

Few Nintendo fans will claim that Nintendo needs to be "leading" in order for it to happen. But they will say that Nintendo, or another company of equivalent attitude, needs to be present.