I don't think Apple ever predicted the iOS will be so successful with games. Although I have a iPod touch and a iPad, I believe they are not entirely in competition with the DS. They work for me because I don't have much time for gaming when traveling. The games provide some time filler in the airport or the hotel at night and they are well supplemented by a good e-reader, web browsing, comic book viewer experience. However, there aren't many longer and/or deeper games available. If I want to play a really engrossing RPG or a playable shooter, I would have to rely in the DS. Also, the iPod touch is kind of expensive and fragile for kids. I am selling my DS but I am sure I will miss some of the better games. However, I have to deal with the fact I don't have time available to play them and I will better served with my two iOs devices most of the time.
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