No, for a number of reasons.
1. No Pokemon. As long as there is Pokemon, millions of Nintendo handhelds will be sold.
2. No buttons. Virtual buttons don't work. You can't feel where the button is. I haven't played many iPhone games, but I've played a lot of SM64DS, and that game has an option to use the touch screen for movement. It's just about impossible to control without hours of practice.
3. Price. iPhones are expensive. They could be selling DSs for 90 bucks if they had to. Apple will never sell anything that isn't way overpriced, it's a huge part of their business model.
4. Nintendo/Sony can do DD too. PSPgo is an all download machine, and we've got DSiWare now. And when new handhelds are released you can bet they'll be backward compatible, at least for DD.
5. Steam hasn't impacted consoles. At least not directly.
"Now, a fun game should always be easy to understand - you should be able to take one look at it and know what you have to do straight away. It should be so well constructed that you can tell at a glance what your goal is and, even if you don’t succeed, you’ll blame yourself rather than the game. Moreover, the people standing around watching the game have also got to be able to enjoy it." - Shiggy
