Buttons make up what handheld lovers want in their, well, handhelds when it comes to portable gaming.
Apple already tried to join the gaming industry and failed. That said, they won't be joining it anytime soon, they will simply let their products get games but will not publich them. Game designers aren't going to bet on a product that isn't built for gaming but rather suited for it.
I can see 5 year olds with a Nintendo DS but don't you find it awkward and even shake if you see a 5 year old with an iPhone or iTouch? The devices aren't made for gaming thus won't be sold as them.
Another thing, Apple won't open a Gaming Division. First party support matters too much, a handheld won't live out of only third party development.
How many mario games do you think are in iTouchs and iPhones? How many games from the SNES and NES era? Too many to count. Lets say all I said before does happen and Apple decides to open a gaming division. Nintendo and competitors would simply say "hey, don't use my products on your device, you're competition now".
Hold your breath, but you'll faint.
