Roughly Drafted has a nice, long analysis of the iPhone as a gaming device, and they hit on a lot of great reasons why the iPhone seems destined to be a great gaming platform. Not only will it have the hardware chops to play games (including a few input devices that no other handheld gaming consoles have ever had), but Apple's SDK implementation, when it finally gets off the ground in June anyway, seems poised to let almost anyone develop any game ideas they have for the device. Throw in a great distribution platform and a relative lack of competition on the handheld platform (Nintendo is undoubtedly working on a successor to the DS, but other than that, there are no real next-generation contenders so far), and Apple apparently has the potential to do very well in the gaming market.
In fact, the only problem that Apple might bump up against in building up in the iPhone as a gaming device is the cost -- at $400, it'll be the most expensive gaming handheld out there. But given that it's actually a smartphone, and thus actually benefits from an already installed user base (people who have the iPhone may very well be people who will have never purchased or used a handheld gaming platform before), the price may not be that big an obstacle to ownership.
And if they can build up a respectable library of game titles, they could even brand an iPod touch/phoneless iPhone as a gaming unit, and sell that at a price that would compete with Sony's PSP and Nintendo's DS. Apple has never historically pushed for the forefont of anything in gaming, but if their showing at the SDK event is any indication, they may be lining up to make the iPhone the place to play handheld videogames in the future.
[Via IMG]
When I was at WWDC I had the pleasure of 
The rumors are flying about gaming giant Nintendo 
The Economist
In my day videogame consoles had 8 bits and we liked it. Nintendo ruled the gaming landscape and Microsoft was no where to be seen. Ah, those were the days.
