Although I agree that the iPhone (and similar convergence devices) will become more and more important to gaming, I’m not too sure that they will ever be that much of a threat to the handheld gaming market the way some people anticipate.
The best way I can put this is that most PC owners have a PC which is a more powerful gaming device than the Nintendo Wii, and yet a lot of these PC owners are buying a Wii to play videogames. This isn’t to say that they don’t play PC games, but I suspect that the majority of them don’t use it as a gaming system or only play flash games and solitare.
Now, where I expect the iPhone (and other convergence devices) to thrive is by providing games which are far simpler than anything you would typically see on the Nintendo DS or PSP ... Basically, I think the most successful projects on the iPhone would be games that are more refined versions of games you would have seen on the Atari or Collecovision.
