Although the iPhone is more powerful than the DS and will be able to have potentially better games, the fact is, the iPhone won't be known for games. It takes time to bring brand/product awareness. I can't see this ending the DS anytime soon, but in terms of judging the thing by it's ability to play games, the iPhone can dominate the DS, especially considering the onboard GBs of storage.
What the iPhone needs, though, is a god damn price cut.
Once it does, and gets more storage (160GB IMO), I will buy this thing in a heartbeat. It's like the supercomputer. But once again, I can't see it upgrading storage, because then it puts the iPod out of business, which is Apple's best known product in brand name.