if nintendo didn't make handhelds they would be long gone by now. they've basically been surviving as the last 10 years because of their handhelds. diversity is good. having home consoles and portables in your product portfolio gives you a better chance at survival because you're not relying on a single product. nintendo will leave the console market well before they leave the handheld one, especially since portables are poised to compose the largest market share in the future.
My Top 5:
Shadow of the Colossus, Metal Gear Solid 3, Shenmue, Skies of Arcadia, Chrono Trigger
My 2 nex-gen systems: PS3 
and Wii 
Prediction Aug '08: We see the PSP2 released fall '09. Graphically, it's basically the same as the current system. UMD drive ditched and replaced by 4-8gb on board flash memory. Other upgrades: 2nd analog nub, touchscreen, blutooth, motion sensor. Design: Flip-style or slider. Size: Think Iphone. Cost: $199. Will be profitable on day 1.
Essay Pro