It's not there yet, but it's definitely a threat. All the major publishers are on board, but they're mostly servicing iPhone with ports of old mobile phone games and DS games. In addition, there are lots of great indie projects, and a couple up-and-coming publishers that are making a killing, like Gameloft and NgMoco.
The biggest sign of a threat I've seen so far is Sims 3. It's out on the iPhone, but no announcement of one on DS, despite Sims 2 coming to DS and doing quite well. Perhaps EA has decided that the MySims spinoff brand is better suited to the DS, while iPhone users would like their Sims closer to the PC version. On the other hand, while the iPhone has been stealing games like Civilization Revolution and GTA: Chinatown Wars from the DS, iPhone games like Flight Control are now pushing through to DSiWare.
Nintendo still has great 1st party games while Apple has none, and the DS is sturdier and cheaper than the iPod Touch, even if the hardware is bulkier and the games more expensive. I'd say that the only reason the two can't co-exist is pocket space. I love my DS games, but I'm not going to leave my phone behind and carrying both around is too bulky most of the time.
"The worst part about these reviews is they are [subjective]--and their scores often depend on how drunk you got the media at a Street Fighter event." — Mona Hamilton, Capcom Senior VP of Marketing
*Image indefinitely borrowed from BrainBoxLtd without his consent.
