In terms of Sony spoiling Nintendo, let's not forget Nintendo's target audience here. My dad has -100 interest in playing Final Fantasy VII or Metal Gear Solid. They're too complicated and they have way too much boring storyline for him. He has at least 1 or 2 interest in playing Dr. Mario or Pac Man, though.
So one of Nintendo's advantages is in what the old 2D games represent to lapsed gamers and gamers like me who grew up on those old systems. People who didn't like 3D games or who lost interest because Super Nintendo had "too many buttons" don't care about Playstation.
Besides that, Nintendo has a big lead in this whole thing - you've got five different consoles on one system, and of course Nintendo itself has ten extra years of great games compared to Sony. Once Sony adds Genesis or TurboGrafx to its downloads, then we'll talk.