Handheld gaming won't die, but it has declined steeply because of mobile gaming. To put it plain and simple cellphones and tablets offer enough entertainment value for the vast majority of children, therefore, the need for a dedicated gaming handheld has diminished significantly in just 10 years time (5 years to be honest).
At this point kids are getting cellphones at 8 years old, some younger, and more than likely those kids have an Android tablet or iPad at an even younger age, and those phones and tablets can do significantly more than handhelds thanks to their robust app stores.
Gaming and software are the strengths of handhelds and will be the only thing that sells them going forward. Nintendo should be fine with the Switch depending on it's price. If it sells in the $249 - $299 I see them doing similar numbers to the 3DS until they get a cheaper model out. I'd say between the 3DS and PSP overall sales.
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