I compared the iPhone to the PSP because it's not better than the DS, but if you remove Nintendo's titles from the DS's library it's not that far off. There is a tremendous amount of quality software on the iPhone and it's a platform that anyone who calls themselves a gamer should own, or at least want to own.
You must have a really focused tastes in games. 2/3 of my DS games are 3rd party. If you got rid of Nintendo games, the only ones I would really miss would be the Zelda's, Advance Wars, Mario Kart and maybe Fire Emblem on the handhelds. I would still consider it a good purchase.
The problem with both the PSP and the Iphone beyond the control issues is the
kind of games they attract. Iphone pulls in more shovelware than the entire combined history of computing in the multiverse without the accompanying good games.
The PSP can't make up it's mind as to what it wants to be and flips personality more than the Fonz tossing a coin. One minute it wants to be a media player, the next a cut down console with cinematic games, after that a Sony PSP lifestyle machine, then it decides it's vag lips are too long and shortens them with a revision every year. Like the PS3, it's conception was born out of insanity. While both made up some of it's short coming like Forest Gump by raw effort, money and dumb luck, the damage was done.
I like Apple and what they do in general, but I can't pay Apple prices. I like them so much in fact I spent 2 solid days building a Hackintosh and countless hours before the build researching just so I can run OSX. I am glad they have found success in the Iphone, however, their luck in getting a foothold in the gaming market is just that, luck. All cellphone for most the last decade have had games, but not until recently has CPU power, battery life and interface made it a possibility make games on phones that might not automatically suck. You do remember the Ngage? Wasting all of 30 seconds playing snake before deleting it? The endless clusterfuck of model restrictions and performance differences? Terrible controls?
The more Apple chases gaming, the more their own slice of the market fragments as each revision slowly breaks it's ancestor by being faster to soon, too incrementally. Add the fact it's also competing with regular phones. Throw on the dollar store toxic shovelware and it loses it's credibility as a gameplayer or a phone. It would be like Germany after D-Day fighting on 3 fronts stretched to breaking point. You can't have a device actively openning itself up to that much competition.