IT's kinda hard to interpret. But (at least) what I think they mean by "crushed" is that their "spirit" or "drive" will be mangled. More or less, it'll break their heart (awww). But I think he has good reason to think so. The DS is a new idea, a risk-taking, yet entirely intrigueing venture. Nintendo's excited (obviously), More or less 3rd parties are excited. If the consumers aren't excited, I think the market is broken. Now, of course there is no reason to just blindly say "Hay DS is great." but if the other 2 parts in this market (electronics and developers) expect great things from the DS, why should we argue? Hell I'll be crushed if the DS fails. It's like the market is saying NO to innovation or at least interesting ideas, and saying YES to status quo.
IF Nintendo, the biggest risk-takers ever, can't afford to take risks anymore, who can?