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besides the piracy on the ipod is even higher than the psp so maybe it will eventually make it a less attractive platform to develop for.. who knows time will tell.
but i think it's indeed a more dangerous competitor than the psp, its like a trojan horse it invades slowly without notice and can
surprise one day.
what holds it from exploding in gaming market is the lack of physical controller but this is smth that can change in the future.
although i dont think its a direct threat for nintendo (loyal fanbase/younger users) it can hurt the psp a lot and in a way it already does..
anyway some good games for the iphone are indeed all you need to carry around u for a quick gaming fix.
i have psp/ds/iphone and i find myself playing more and more with the iphone than the others because is smth that you carry with u all the time anyway. for a full featured game you play in your console/computery there is no need for it in a portable device.