We have yet to see if this strategy of selling a product as a non-gaming device, then turning around and announcing "it also plays games!" works. The people I know with iTouch/iPhones aren't the type to care about those type of games.
I won't deny that it has a shot at cutting into the expanded market, however, I'm still a bit skeptical of how much damage this device in particular can do.
Anyway, Nintendo just released the DSi in Japan, which helps them further expand into the expanded territory. They're in a strong position against the iTouch/iPhone because Nintendo products are dedicated to gaming, whereas Apple is adding it on as an afterthought. They have more room to create dedicated, innovative gaming hardware (Apple does not - they won't mess with the iPod/iPhone's core functionality).
edit: Aiee, shame a ban had to come down... oh well...
