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I've never understood this argument. It's so black and white with people when it comes to this subject. Either handhelds live or they die because of smartphones. I'm not sure why people assume just because thats popular now it means it'll become the standard. Handheld gaming was the fad a few years ago, it tends to go in and out of popularity. Right now, it isnt as popular as it was. But youre also comparing these things to the DS and PSP. The DS was a beast and the PSP was riding off of Sony owning the market. They both sold very very well. The 3DS and PSV doesnt offer the innovation that the DS and PSP had when they were out. Its really no surprise that they arent doing amazing in comparison. Plus the smartphone market isnt steady. People rarely play an app game more than once, and with the few successful games on those devices, theres a million more who arent successful. It's taking away from the market because its convenient and people are cheap. Not because of quality. Over time the market will stick to another fad that'll "kill" another form of gaming.

TL;DR:
-People gotta calm their tits about smartphone gaming, it aint killing anything
-3DS/PSV lack the innovation that their predecessors had, therefore lack the same appeal from the public
-Mobile market is unstable anyway
-Smartphone gaming is at most a fad anyway and in a few years something will replace that fad with another that'll "kill" another part of gaming