Allow my to supplement this discussion with a story ...
Once upon a time, there was a world-class cell phone manufacturer named Nokia. Nokia found that their cell phone game "Snake" was the single most played game of all time. Nokia then came to a realization ... people love to play games on their cell phone, and no one makes better cell phones than Nokia! Nokia decided that they should make a cell phone that played more sophisticated games than Snake, and then they could single-handedly take over the portable game market. They launched this new cell phone, spent a lot of money courting developers, but in the end, it was a disaster. The End.
What is the moral of my tragic tale? Post Hoc Ergo Propter Hoc. For those not familiar with Latin, it essentially means that one thing leads to another, but it's rarely (if ever) true. The existence of a thing does not mean that something else must have happened. Why do (did) people love to play Snake? Because it was on a device they already owned and carried around with them constantly. It was a diversion, it was simple, it was short, and it was FREE. Does this mean that people enjoyed playing Snake? Doubtful. It was just there. Would these same people buy a special cell phone just to play games? The obvious answer is no, but Nokia's culture and groupthink blinded them to this eventuality.
So now we're at the exact same situation. Non-gamers love playing simple web games. Does this mean that they'll play simple games on a handheld machine that they have to buy? Of course not, but this is the conclusion that Nintendo (and others, incidentally) have come to. A high adoption rate for simple web games at $20 each does not mean that same demographic will purchase a $150 machine to play similar games. What will get them to adopt the machine? The answer is startlingly simple .... NON-GAMING FEATURES.
Huh? That's right, people will perceive additional value in the $150 machine if it can do something other than play games. This is why I keep saying that Nintendo releasing a PDA type application for the DS is so critical ... because all of a sudden, the device becomes more than just a game console, it becomes something that they NEED to carry around with them all the time, and once that happens, they'll be more receptive to buying game software for it.
Quite frankly, if a company like Nokia or Motorola teamed up with Nintendo to develop a game console that was a decent multi-function device as well as a good game system, a device where each company could leverage their strengths (instead of one trying to branch out into something that is not their core competency), I think they'd have a major hit on their hands. That is, if the PSP doesn't beat them to it.