Well I thought that your oppening plea was pretty well laid out.
Now yes games sell consoles, but you're talking about inovation more than anything and here is my answers to that.
1) 3D: you say the 3D on small screen is underwelming... I don't know if you have a 3DS, but as someone who has alternated 3Dvision(PC), 3D movies and now 3DS, I can tell you that you are wrong. 3D in theaters is not at a high setting. There is a reason for that, high settings strain your eyes if you are not used to it. The 3DS has the capacity to go beyond what movie theaters offer. The small screen is of no importance as you focus on what you play. If it was a big issue, handhelds would not be selling like hotcakes compared to consoles.
Sure you point to 3D TVs is valid, but the average customer does not buy high end electronics, they buy the mass market device that the 3DS is instead. (And PS3 is a home console, not a handheld, so they don't really compete in audience).
So in short, the 3DS is currently a 3D offering that is highly viable and above any other option for the mass market.
2) lack of inovation: While AR is much more powerfull on the 3DS than on smartphones (PSEYE really doesn't count as the camera is fixed), it is indeed not something that will stay above competition for a long time. What is above the competition is the DS design. Indeed, Nintendo struck hard with the DS and no one has really caught up to it. On smartphones the touchscreen is not as precises (fingers/stylus) and you block part of the play area using it. Moreover the 2 screen design lets progamers offer an enhanced experience which is part of the DS sucess.. The 3DS lacks in inovation as there is no reason to, the DS design is still ahead of the cometition and a power boost is all that it really needed (NPG is just that over the PSP, the other additions to it are mostly gimicks too, as the 3D, except the 3D is currently unique on contender for gaming device).
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