A games machine contains too many unique physical feature to fit on a a phone size device. While you can add a phone to a game player, it is much more difficult to do the opposite. Look at the size of the DS, or for some people who like the DSXL. It's 3 times the size of my Blackberry. "But oohhboy! all that extra mass would merge with the phone". True, but I don't take the DS everywhere in my pocket, it goes in the bag.
A dedicated machine allows for extras you cannot get away with as a phone. More heavy duty hardware that uses more power, dual screens, kid resistance, comfortable form factor for gameplay, superior controls and the ability to increase the size for larger people (DSXL). No need to entangle yourself with another phone plan you don't need. Offer far better price of entry without the threat of obsolesce in 1 to 2 years.
I never said there wouldn't be some level of convergence, but you can't physically fit in both feature sets without thinking back to 1980's brick phones. They will always have to contented with the fact that all a phone companies are always as each other throats to unify anything, even in their own lines.
Maybe in the far off future with opaque holographic displays, small self contained generators, quantum computers powerful enough to simulate a small universe in the palm of your hand. Or maybe we get an
Eyephone. Who knows, but I don't expect to see the disappearance of a dedicated portable anytime soon. The technological singularity would have to arrive first.