Nintendo will rape the shit out of them.

You definitely should get a 3GS, the 3G model is soon 2 years old and as the newer model is selling more and more, the installed base is tipping towards the newer models all the time so more and more games will be made to take advantage of the faster processor and GPU of the 3GS. As a quick comparison, Real Racing in 3G supports 6 cars in the track at the same time; when the 3GS was new the devs reported that they could put 40 cars on the tract at the same time with no problems at all. So the difference is quite dramatic for games. Anyway, the next model is due out in about 3 months so if you're not in a hurry you might want to wait until that.

Ahem. Apple is building a gaming platform, piece by piece. It's the 3rd parties that make all the games. With regards to gaming, Apple has so far provided two frameworks specifically for games: one for wireless communications for multiplayer games over bluetooth or wi-fi, and now the Game Center. So I think it is fair to say that Apple has not been making a gaming system, it is the developers and gamers who are using the devices for gaming.

Edit: Forgot to mention that Apple makes pennies out of the App Store sales, they are not after a quick buck from $0.99 sales.

Smart move imo. Microsoft has no presence in the handheld space (lol Zune), so Apple leveraging Microsoft's chief console advantages (Live) makes some sense here. Especially against Nintendo.

I don't know if you can see it as competition. Somehow i just can't see people thinking whether to spend their money on ipad/iphone+games or nintendo ds/sony psp. For me, they're not fighting over the same buck.

What do you guys think?

Kinda funny to see some of the reactions...

Most of the arguments people are throwing at Apple have been thrown at the Wii for the last 3 years..........

is OS 4 out now?
Sweet!!

They can have over a million games. They still need to make them popular. And if all people do is download a 'racing' game and get bored with it after 5 minutes because it controls horribly and its 2 levels long, then they aren't going to go and download a second racing game.

The reason people come back to the DS is because they get addicted to games like Mario and Warioware, and want more.

I don't think people walk into the store and decide iphone or ds/psp.

Instead, they will carry a iphone already and say the games are plenty fun, I don't need to spend more money or carry more junk around.

As a multimedia device that happens to do games too, iPad could be seen as competing with PSP, at least. But this is how things can appear only considering HW and the purposes it's suitable for. The kind of games and other apps that will be developed for or ported to it can determine more which portable it will compete with, if any. This IMVHO.
As I wrote in another thread, the only almost sure genre whose I could see it stealing some users from DS is that of interactive recipe books.