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I believe Nintendo has a very effective strategy at play now, and it would be  counterproductive for them to stray from their core business into media/mp3-player market, even moreso as that market is so single-handedly dominated by Apple. Same as it would be foolish for Apple to try to enter the handheld gaming console market, I think.

We have to also remember that there already is a handheld mediaplayer/console, made by an extremely well known brand in both media and gaming markets, and though it has sold respectable numbers, it's nowhere close to either iPods or the DS. So, I believe it would not be a good idea to make another do-it-all-product, and it could serve to dilute the brand instead of strengthening it.