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Ok that chart Apple showed is a joke. But still, Apple is actually beating Sony in the portable game software market.

http://www.vgchartz.com/photos/pics/6984670aaa.png
US Game Software Revenue Martket Share - 2009

Nintendo DS 70% (down 5% from 2008)
iPhone OS 19% (up 14% from 2008)
PSP 11% (down 9% from 2008)

I admit I was shocked at first that the iPhone was beating the PSP. But seriously, look at the 2009 that the PSP had. The PSP didn't really have much in the way of popular titles for the west. Dissidia Final Fantasy was the best selling 2009 PSP title in Americas. And it sold less than 500k. The PSP is basically a niche handheld right now. Badass jrpg library (not as much as the DS in my opinion though) but not much in the way of mainstream titles lately. Even Monster freakin Hunter was the third best selling PSP game in 2009 in Americas (yes Americas ffs). It's pretty much become the western otaku's handheld right now.

Now the iPhone on the other hand, games are going to be popular on it since A) a lot of people own a iPhone or iPod Touch, and B) It's not so convenient to carry around both a iPhone and a PSP at the same time. So when people need time to kill, they just take out their iPhone, play a quick game and kill some time.